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Science, Technology and Innovation Policy Review - Oman
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UNCTAD/DTL/STICT/2014/1
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Copyright © United Nations, 2014
All rights reserved
FRONT MATTER
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Preface
The Science, Technology and Innovation Policy Reviews prepared by UNCTAD aim to contribute to the
development of national capacities in this field in order that national science, technology and innovation
plans and programmes make an effective contribution to development strategies and improve the
competitiveness of the productive sectors in a global economy in which knowledge is an increasingly
important factor. This review is intended to be a tool for learning and reflection. It is an analytical instrument,
not a rating mechanism, which examines a set of proposals from an external and neutral perspective.
This publication has three fundamental goals. Its first goal is to offer the Sultanate of Oman an up-to-date
assessment of the framework conditions and interactions required for a functional national innovation
system. The second goal is to draw attention to policy requirements for strengthening the national
innovation system based on three important pillars: human capacities, intellectual property and economic
diversification. The third goal is to provide a number of recommendations for strengthening policies and
measures in order to improve technological capacity and encourage innovation.
The review of the science, technology and innovation policies of the Sultanate of Oman was conducted in
response to a request by the Government of Oman and received the support of the Research Council of
Oman. During visits to the Sultanate of Oman, the team held nearly 100 interviews and meetings with
representatives of government agencies, research institutes, universities, trade unions, chambers of
commerce, businesses and non-governmental organizations. An initial draft of this document was
presented and discussed at a national workshop held in Muscat on 10 December 2013, with the
participation of more than 100 experts and national science, technology and innovation stakeholders. The
comments and suggestions made there have been taken into account in the preparation of this review.
This review would not have been possible without the cooperation of The Research Council of Oman and,
in particular, H.E. Dr. Hilal bin Ali Al Hinai, H.H. Dr. Fahad bin Al Julanda Al Said and Dr. Abdullah bin
Mohamed Al Mahruki (the national focal person). A special appreciation is owed to the National STIP
Group and the Governance of the Grand Committee chaired by H.H. Sayyid Shihab bin Tariq Al Said.
Gratitude is also extended to all participants in the national workshop and to the persons and entities, too
numerous to be listed, that generously contributed their comments and ideas.
The assessments, opinions and conclusions expressed in this document are entirely those of the
UNCTAD secretariat.
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Acknowledgements
The review was prepared under the direction of Anne Miroux, Director of the UNCTAD Division on
Technology and Logistics, and under the direct supervision of Angel González Sanz, Chief of the Policy
Review Section of the Science, Technology and ICT Branch. The document was produced by UNCTAD
economist Dimo Calovski with inputs from expert consultant Jean-Eric Aubert.
The document greatly benefited from inputs from the International Labour Organization which has been a
partner in preparing parts of this report by providing substantive contributions, especially in the drafting of
the section on human resources labour and employment. Professor Zafiris Tzanantos, ILO consultant and
labour market expert, and Mary Kawar, ILO Regional Office for Arab States, provided comments on the
draft text.
The manuscript was copy edited externally by Praveen Bhalla and typeset by Dimo Calovski. Sophie
Combette designed the cover.
FRONT MATTER
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Contents
Front Matter ............................................................................................................ i–xx
Preface ..................................................................................................................................................... iii
Acknowledgements ................................................................................................................................ iv
Contents ............................................................................................................................................... v-vi
Abbreviations .......................................................................................................................................... vi
Executive summary ............................................................................................vii-xviii
Part I: The national innovation system of Oman ................................................... 1–25
1. Introduction ..........................................................................................................................................1
1.1 A problem of sustainability .............................................................................................................1
1.2 Requiring a new development strategy ..........................................................................................1
1.3 Outline of Part I: The national innovation system of Oman ............................................................2
2. Overview of the innovation system of Oman ....................................................................................2
2.1 Global innovation indicators ...........................................................................................................2
2.2 An innovation system in need of reform .........................................................................................3
2.3 The need for creative dynamism ...................................................................................................5
3. Framework conditions and the national innovation system ...........................................................6
3.1 Overall governance ........................................................................................................................6
3.2 Macroeconomic context..................................................................................................................7
3.3 Business environment ....................................................................................................................8
3.4 Infrastructure ................................................................................................................................10
3.5 Human capital and research.........................................................................................................10
4. Key interactions I: Business and academia ....................................................................................11
4.1 The business and industrial world ................................................................................................11
4.2 The academic and research world ...............................................................................................14
4.3 Conclusions ..................................................................................................................................17
5. Key interactions II: Government policies and programs ...............................................................17
5.1 Policy making institutions .............................................................................................................17
5.2 The Research Council and research and development programmes ..........................................18
5.3 Support to innovation projects ......................................................................................................20
5.4 Framework conditions’ initiatives ..................................................................................................22
5.5 Agriculture Public R&D structures ...............................................................................................23
5.6 Overall assessment .....................................................................................................................24
Part II: Strategic innovation pillars ...................................................................... 27–61
6. Human resources, labour and employment ....................................................................................27
6.1 Introduction ...................................................................................................................................27
6.2 Population, education and labour supply .....................................................................................29
6.3 Employment and unemployment ..................................................................................................33
6.4 Omanization .................................................................................................................................36
6.5 Conclusions and policy recommendations ...................................................................................40
7. Intellectual property, innovation and diversification......................................................................42
7.1 Introduction ...................................................................................................................................42
7.2 IPR legislation in Oman ................................................................................................................42
7.3 Strategic considerations and IPR .................................................................................................44
7.4 IP in practice .................................................................................................................................46
7.5 Traditional knowledge, culture and genetic resources .................................................................47
7.6 Conclusions and policy recommendations ...................................................................................49
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8. Economic diversification and innovation strategy .........................................................................50
8.1 Introduction ...................................................................................................................................50
8.2 Progress in diversification.............................................................................................................50
8.3 Strategic issues and diversification ..............................................................................................52
8.4 Sectors with diversification potential.............................................................................................53
8.5 Conclusions and policy recommendations ...................................................................................60
Part III: Recommendations and conclusions ...................................................... 63–72
9. Policy recommendations ..................................................................................................................63
9.1 Strategic prerequisites ..................................................................................................................63
9.2 Innovation agenda: Actions with a short-term impact ...................................................................65
9.3 Innovation agenda: Actions with a longer-term impact .................................................................66
9.4 An action plan for a national innovation strategy and system ......................................................69
9.5 Concluding thoughts: communicate, inspire, and lead .................................................................72
ANNEX: Summary table of recommended actions ............................................. 73–75
References ............................................................................................................... 76
Notes .................................................................................................................. 77–79
Abbreviations
FDI
GCC
GDP
GII
IIC
ITA
ICT
ILO
IP
IPR
MOCI
NCSI
NISAP
OCCI
OMR
PACI
PAIPED
PDO
PEIE
R&D
SME
SQU
STI
STIP
TIMSS
TRC
TRIPS
UNCTAD
WEF
WIPO
WTO
foreign direct investment
Gulf Cooperation Council
gross domestic product
Global Innovation Index
Industrial Innovation Centre
Information Technology Authority
information and communications technology
International Labour Organization
intellectual property,
intellectual property right
Ministry of Commerce and Industry
National Centre for Statistics and Information (Sultanate of Oman)
National Innovation Strategy Action Plan
Oman Chamber of Commerce and Industry
Omani rial
Sultanate of Oman Public Authority for Crafts Industry
Public Authority for Investment Promotion & Export Development
Petroleum Development Oman
Public Establishment for Industrial Estates
research and development
small and medium-sized enterprise
Sultan Qaboos University
science, technology and innovation
science, technology and innovation policy
Trends in International Mathematics and Science
The Research Council
Agreement on Trade-Related Aspects of Intellectual Property Rights
United Nations Conference on Trade and Development
World Economic Forum
World Intellectual Property Organization
World Trade Organization
EXECUTIVE SUMMARY
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Executive Summary
1. Introduction
Oman, located on the south-eastern corner of the Arabian Peninsula, has a long and rich history and a
tradition of exploration abroad. With 3.9 million inhabitants and a per capita income of $21,390,
Oman has experienced robust economic growth and remarkable political stability since His Majesty
Sultan Qaboos bin Said ascended the throne in 1970. Such economic growth has been made possible
largely by earnings from the oil and gas sector, which dominates the economy and represents 51.6 per
cent of the country’s GDP. However, this development path is at risk: in the short-term, the economy is not
generating enough jobs for Omani nationals, while in the long-term, oil reserves will decrease and their
exploitation costs will grow against a backdrop of oil price volatility. Moreover, economic development
based largely on exploitation of oil reserves is questionable from a long-term environmental perspective.
Oman ranks among the top 20 countries globally in terms of its per capita carbon emissions, and growing
and extensive urbanization is resulting in correspondingly high energy consumption, along with traffic
congestion problems.
A further complication is that the growth of the economy has relied, to a large extent, and particularly during
the last decade, on a considerable amount of cheap labour from abroad, which, today, constitutes about
one third of the population. On the other hand, there is considerable unemployment among the local
population, especially Oman’s youth. These issues are not entirely specific to Oman; they are also
prevalent in other countries that depend on oil revenues for growth and have a large proportion of imported
labour. However, they will need to be addressed as a matter of priority in view of Oman’s specificities and
the unique nature of its economy and society.
His Majesty Sultan Qaboos and his Government are determined to influence the development trajectory of
the country. The 8th Five Year plan (2011–2015) has a series of key objectives, including diversification of
the economy, upgrading of human resources, support for small and medium-sized enterprises (SMEs) and
promotion of foreign investment. There is clearly a need to accelerate the structural transformation of the
economy, particularly with a view to job creation. A key strategic response by the Government has been
the introduction of an active policy of Omanization of the labour force. However, while this may produce
some short-term positive results, a more enduring and sustainable solution to Oman’s development
challenge is to achieve transformative and diversified growth underpinned by a strong national science,
technology and innovation system and strategy.
While the establishment of an efficient national innovation system can lead to a more diversified, more
productive and more sustainable economy, with higher quality and more attractive jobs, there are limits to
the employment opportunities that an innovation-based diversification process can generate. Global
economic competition, the nature of technological change and demographic trends will influence the
dynamics of transformation. These in turn will feed back and change broad perceptions and expectations of
conditions of employment, social services, and the nature and quality of education, leisure and retirement.
2. Oman’s innovation system and global innovation indicators
Acknowledging the key role of innovation as a driver of economic development, it will be necessary for
policymakers to be able to measure and assess outcomes. For this, they will require innovation indicators
beyond the traditional metrics of inputs, such as the level of funding of research and development (R&D).
Indicators are necessary to support policymaking as a continuous process. An example of a synthetic
indicator is the Global Innovation Index (GII), developed by Cornell University, INSEAD, and the World
Intellectual Property Organization (WIPO), which combines some 80 indicators detailing the components of
the innovation ecology both from the input and output sides. It uses objective and subjective data.
Objective data are quantitative, such as school enrolments and Internet use; subjective data are derived
from surveys of opinions of business and government leaders and executives. It also looks at GII in relation
to per capita gross domestic product (GDP).
Oman is ranked 80th on the GII (2013). 1 To a large extent, this is due to sub-optimal efficiency in the use of
an environment and assets that are advantageous from an innovation perspective. While GII rankings
should not be understood as an absolute indicator, note should be taken of year-on-year relative changes
which should encourage a more proactive policy involvement. The modest performance of the national
innovation system in Oman suggests the need for accelerating its policy reform processes in the near
future. Regional comparisons indicate that Oman needs to develop an effective and efficient innovation
system, including improving its innovation infrastructure and climate, to augment its innovative outputs.
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The GII confirms that Oman has sufficient institutional strengths and that its main challenge is that its
economy is not sufficiently diversified.
3. Framework conditions and the national innovation system
Framework conditions constitute the overall environment in which a national innovation system functions.
Variations in innovation performance between economies are largely due to differences in how the
government, firms, universities, research centres, public agencies and other participants in innovation,
interact within the existing framework conditions.
Governance
His Majesty Sultan Qaboos bin Said is firmly at the helm of Oman and benefits from a very strong aura of
prestige. He determines the strategic course of the country, taking key decisions expressed in the form of
royal decrees following consultations with concerned bodies. He occasionally intervenes in questions
directly related to innovation and the business environment, as described later in the government policies
and programmes section of this review. He is assisted by a Cabinet of Ministers, which is responsible for
developing and implementing national policies on economic, political, social, executive and administrative
matters, including presenting proposals for legislation.
A number of agencies, with varying degrees of autonomy, are in charge of specific economic, social and
technical issues. The Research Council (TRC), which is in charge of R&D strategy and policy and covers
innovation policy issues, plays a particularly important role in the development of the country’s innovation
system. The relative effectiveness of the political and institutional environment and high level of political
stability have resulted in considerable trust of the citizens in public institutions, in the political class and in
the independence of the judicial system. Conditions of social dialogue are good, with an active tripartite
process referred to as Social Dialogue Oman, which includes the Chamber of Commerce, the trade unions
and the Ministry of Manpower. The Government has a strong capacity to develop, enact and enforce
legislation. This is complemented by a long-term and strategic planning approach, embodied in Vision 2020,
which was adopted in 1996, and Vision 2040, which is currently under development. Five-year plans are
systematically implemented and develop the Vision in operational terms to cover various economic sectors
and social issues.
In order not to squander the positive strengths of Vision 2020 and upcoming Vision 2040 strategies, a
particular challenge for policymakers is to improve horizontal and non-hierarchical consultations and
communication flows. At present, these are sometimes bound by a hierarchical organizational structure and
communication cultures of some domestic institutions. Enabling greater and faster horizontal
communication would reduce the burden at the highest level of policymaking to act as information
gatekeepers on details that are not meaningful in terms of seniority and competence. Improving interinstitutional communication is a fundamental requirement for developing an innovation system and
institutional leadership, and policymakers should explore and eliminate any disincentives that prevent
bureaucracies from developing broader linkages.
Macroeconomic context, business environment and infrastructure
The macroeconomic situation in Oman is likely to be the most problematic factor in developing its
innovation system. Growth has been maintained at a satisfactory level of over 4 per cent a year thanks to a
strong push for infrastructure development, including air and sea ports, roads, water, energy and housing.
Financed by oil revenues, such projects have helped to create jobs, and the wealth created has had a
trickle-down effect on trade, services and some manufacturing. However, many new jobs have been filled
by lower cost imported labour, which, given the liberal local labour regulations, is easy to hire and fire.
While an open labour market is often seen as a positive factor in international benchmarking on the
business climate, it may present a serious challenge to resolving the issue of domestic unemployment.
Furthermore, growth based on importing a large percentage of low-cost labour can be a strong disincentive
to innovation and technology-based growth and economic diversification.
The Government’s Omanization policy, aimed at encouraging the employment of Omanis, has had some
positive results. Omanization can be a positive factor for innovation if the increased employment of Omanis
in firms and industries is matched with improved productivity, business sophistication and, eventually,
innovation. However, much remains to be done in linking the educational system with industry
requirements so as to produce a workforce that has the skills needed by firms. At the same time, given its
oil wealth and development ambitions, it would be counterproductive to overstate the goals of Omanization
EXECUTIVE SUMMARY
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while neglecting to consider trends in the global economy and migration which are key to the transfer of
tacit knowledge and skills.
Another major macroeconomic condition that presents a challenge for innovation is the fact that the
petrochemical industry and its oil revenues dominate the economy, which is moderately affected by the so
called “Dutch disease”, resulting in a decline in global competitiveness of domestic sectors as imports
financed by earnings from natural resource exports become more affordable. On the one hand, this creates
disincentives to innovation and diversification because the economy grows mainly to service the
petrochemical sector, but not to export. Moreover, with gasoline subsidized at 450 Omani Rial (OMR) per
capita per year, private investment in the development of commercial renewable and sustainable energy
resources is virtually impossible. On the other hand, in recompense, the Government uses oil revenues to
build general infrastructure and it intends to increase spending on research and innovation to reach 2 per
cent of GDP by 2020. Outside the oil and energy sector, industry has little interest in investing in R&D, as
technology transfer is trade-based (i.e. it is imported), which is often seen as the better and cheaper
solution.
A significant challenge for innovation is presented by an economic structure dominated by large firms even
though there are 91,000 active SMEs. Of these, only about 100 SMEs file tax returns, indicating that the
middle-intermediary layer of firms is insufficiently developed. The absence of a strong antitrust authority
and competition law, and an underdeveloped technical capacity to manage intellectual property, inhibit the
creation of an economic environment conducive to the development of a dynamic SME sector and
especially innovative firms. Nevertheless, outside the State oil and gas businesses, private sector activity is
steadily growing. Recognizing the relevance of SMEs for diversification and growth of the economy and its
potential for increasing employment opportunities, several measures are already being taken to develop
the required infrastructure and devise necessary policies for the SME sector, including improving access to
finance. Finally, people do not aspire to entrepreneurship and innovation, as these are not part of basic
education in a society where oil wealth makes people less eager to take risks. The result is a strong
preference for investing in tangibles such as real estate and trade, rather than in industry. Safe and wellpaid public sector jobs also serve as a disincentive to entrepreneurship.
Oman has a high quality physical infrastructure, which is being constantly improved. The well-developed
transport and energy infrastructure is an asset, connecting the different provinces and, notably, the interior
of Oman with its capital. While these are positive developments, they have only a mild impact on innovation
and entrepreneurship. Policies favouring procurement from local SMEs and enforcing environmental norms
could help improve the impact to some extent. In contrast to the physical infrastructure, development of the
information and communications technology (ICT) infrastructure requires urgent policy attention.
Broadband subscriptions are relatively low, and broadband costs could be made more favourable for firms
and households. Diversifying the economy through innovation necessarily means enabling full and
unhindered access to the global knowledge commons and the Internet. By contrast, government web
services are well developed as a result of an active policy of e-government. Achievements in ICT
infrastructure development are more the result of government agencies’ internal efforts than those of the
private sector.
Human capital, education and research capabilities
Basic education in Oman needs to be improved as evidenced by the fact that most tertiary educational
establishments require their students to take “foundation courses” before beginning their undergraduate
studies. The education system lacks accreditation standards and mechanisms, with quality control relying
on an inspection system and a qualitative assessment of inputs rather than outcomes. The Ministry of
Education is developing professional standards for teachers, school principals and supervisors, as well as
curriculum and assessment standards. While primary and secondary education presents important
challenges, indicators in tertiary education show a mixed picture. The level of gross tertiary enrolments is
higher than the average for the Gulf Cooperation Council (GCC), and, together with enrolments abroad, the
proportion of graduates in science and engineering disciplines is increasing. However, social sciences
continue to attract the majority of students, which is creating a serious mismatch between the output of the
education system and the requirements of the labour market.
While there are no official statistics on spending on scientific and technological R&D in Oman, it is
generally estimated that the country spends 0.2 per cent of GDP on such activities. This percentage is very
low, particularly in relation to the level of GDP per capita, but it is in the order of magnitude of other GCC
countries. Most of the public research infrastructure is in academia and in government research centres
established in the agriculture and fisheries sector. The total number of researchers in full-time equivalent is
estimated to be about 2,000 persons.
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4. Key interactions: Business, academia and government
Interactions involving the innovation system are fragmented
The innovation system of Oman is fundamentally fragmented; cooperation between key entities (between
academic and business structures, among academics and among businesses) is uneven and often based
on personal acquaintanceships. Most research bodies are rather small, and it seems difficult to scale them
up. Innovations and innovative undertakings are yet to emerge in order for virtuous clustering processes to
take place. On the other hand, there are also several positive features. Although not very innovative, the
larger Omani companies demonstrate an inner dynamism that should be exploited. There is a clear
understanding of problems in most of the concerned communities, in the business sector as well as in the
academic world and in government entities. And last, but not least, the whole innovation system and its
components display a significant internationalization trend which is a source of dynamism and change that
Oman is well positioned to exploit, given the openness of its economy.
Business and industry
Oman’s economy is dominated by large firms that operate mostly in the petrochemical and natural
resources, construction and trade sectors. Their innovative activity is not negligible, but it is insufficient to
spur innovation throughout the economy and buttress the functioning of a meaningful national innovation
system. Whatever innovation takes place benefits mainly several large firms and the companies operating
under their umbrellas. For example, Petroleum Development Oman (PDO) dominates the oil and gas
sector and has a solid R&D infrastructure. It has been developing advanced technology for enhanced oil
and gas recovery. However, there are few, if any, spin-off businesses emerging from this innovative
endeavour, and interactions with academia and other R&D institutions seem to be limited.
Most large Omani firms do not have in-house R&D, and new technologies are introduced mainly through
joint ventures with international partners. There is little incentive to innovate inside the firm or in
cooperation with other, smaller firms, R&D entities or academia. The private sector is perceived as
relatively conservative, as many top executives in large companies tend to have a hierarchical, top-down
style of management. This does not usually encourage spin-off activities or fruitful subcontracting and
linkages between large and small firms, and there is an overwhelming preference to conduct technology
transfer through international trade. Similar challenges are encountered when international joint ventures
are expected to interact and support the domestic SME sector and include it in the value chain in a
supportive role. As the authority for negotiating the responsibilities of joint ventures and FDI firms is
fragmented, involving different ministries, it is difficult to exercise policy in this realm. Better synchronization
and coordination would greatly benefit the activities of the Public Establishment for Industrial Estates
(PEIE), the Public Authority for Investment Promotion and Export Development (PAIPED) and the Ministry
of Commerce and Industry (MOCI).
Finally, Oman is a relatively small economy and technology market, and will need to rely more on regional
cooperation within the GCC to improve technology transfer. Basic laboratory and testing facilities are
available in Oman and seem well-equipped, according to the firms and universities visited by the UNCTAD
mission. However, a major issue for the SME sector and aspiring innovators is the lack of independent
facilities for prototyping. Such activities are often outsourced abroad.
Industrial activity takes place in eight industrial estates and four free zones. Their role in industrial growth is
important, particularly as the oil and energy sector is capital-intensive and has not generated many jobs.
However, there are a number of fundamental problems common to the industrial estates and free zones: a
low level of collaboration, a lack of strategic perspective, and a focus on mining and services and
construction materials, with modest innovation ambitions. A recent survey of estate tenants found little or
no investment in product design, innovation and productivity. There were no intellectual property (IP) issues
raised by any of the businesses located there. A major obstacle to innovation is that young graduates do
not have the right competencies relevant for firms, such as communication or business research skills. It
would be helpful if firms had greater input into curricula designs at vocational schools and universities.
There is clearly a need to improve cooperation between firms and universities on R&D and technology
adaptation and innovation.
The world of academia and research
Oman has relatively well-developed universities and colleges. The first public university in Oman, the
Sultan Qaboos University (SQU), founded in 1986, has nine colleges: Arts and Social Sciences, Economics
and Political Science, Education, Law, Nursing, Agriculture and Marine Sciences, Medicine and Health
EXECUTIVE SUMMARY
xi
Sciences, Engineering, and Science. It runs a number of research centres, and has a university hospital on
the campus. SQU is open to Omanis only and hosts more than 10,000 students. In addition, the Ministry of
Higher Education administers six colleges of applied sciences in regional centres outside Muscat with a
total of 8,000 students. The Ministry of Manpower operates the Higher College of Technology in Muscat
and six colleges of technology throughout Oman. Several government bodies run their own training,
research and academic programmes. The Ministry of Health runs a number of health institutes to train
nurses, paramedics and pharmacists. The Ministry of Awqaf and Religious Affairs operates the Institute of
Sharia Sciences. The Central Bank of Oman runs the College of Banking and Financial Studies. Nineteen
private colleges and seven universities are in operation as well, and respond to popular demand for studies
in business administration, engineering and computer sciences. Most of them are affiliated with European,
Australian or United States institutions, thus their language of instruction is typically English.
Higher education establishments face a number of challenges. First, there is a need to systematically
retrain students entering these establishments through foundation courses so that they reach a minimum
level of competence in language and maths skills. Secondly, retaining research staff within these
establishments poses particular problems, often due to insufficient incentives. Thirdly, cooperation with
government bodies often depends on established personal relationships, as there is no formal innovation
strategy to provide an institutional framework for collaboration. Finally, from the industry perspective,
research themes and projects tend to be overly academic mainly aiming at having research results
published, as the ultimate validation, rather than on practical applicability, thus a priori limiting the potential
for cooperation.
The public research and technology infrastructure has been developed mainly in the agriculture and
fisheries sector by the Ministry of Agriculture and Fisheries. The research focuses on challenges arising
from abiotic and biotic factors, including climate change, which has been affecting local ecosystems
through the associated effects of natural disasters such as cyclones, flooding, droughts, ocean acidification
and human activity. A major problem is that salaries for researchers are not competitive and budgets are
regimented, leaving no room for developing incentives. As a result, researchers often leave their field of
research on completion of their doctorates to seek better earnings elsewhere.
Policymaking institutions
The main entity for science, technology and innovation (STI) policy in Oman is The Research Council
(TRC). Established in 2005, TRC acts both as a policymaking and a funding institution. It has a unique
position in the government setting since it does not have the status of a ministry. It is more of an adjacent
body, chaired by His Highness Sayyid Shihab bin Tariq Al Said, as high-level adviser to His Majesty Sultan
Qaboos. It has a staff of 170, led by a Secretary General.
Other important bodies involved in supporting innovation or improving its climate include the IT Authority,
the Ministry of Industry and Commerce, and the Ministry of Higher Education. The Education Council of
Oman is charged with the advancement of all types of education at all levels, and works to ensure that
educational development is coherent with national economic and social priorities. The Cabinet of Ministers,
the Supreme Council for Planning and the Council of Oman can and do consult with a number of
representatives of the business sector and civil society, including trade unions and the Oman Chamber of
Commerce and Industry (OCCI), when designing their policies. However, there are indications that the
OCCI has not been fully accepted as a strategic partner in government initiatives.
The key challenge is to improve coordination in the conduct and management of STI policies. While there
is not much overlap, the absence of a national innovation strategy allows each ministry and related
agencies to elaborate STI policies without much cross-consultation and coordination. As a result, there
appear to be poor synergies and implementation.. The bulk of the R&D programmes are developed by TRC
within the context of the National Research Strategy, which consists principally of 14 diverse programmes
designed mainly to foster a research culture in Oman. Programme implementation appears to be slow:
often it takes a minimum of two years from presenting an idea for a programme to the first call for proposals
for implementation. This may be due to a lack of capacity within the agency, a search for consensus, or
highly cautious selection processes. It seems that none of the programmes include mechanisms to involve
the business sector in their design phase, which would maximize innovation performance and impact.
With regard to practical support for innovation, an Industrial Innovation Centre was recently established in
the Knowledge Oasis in the Muscat industrial estate. However, it is operating on a fairly small budget of
OMR 1.5 million, and few of the programmes are aimed at directly supporting private firms’ innovation and
technology needs. There seems to be reluctance or a lack of consensus among Oman’s STI policymakers
to directly support innovation efforts of private firms. This may be due to a literal interpretation of free
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Science, Technology and Innovation Policy Review - Oman
market principles. While academics are free to take ideological positions, policymakers worldwide have
often tended to adopt a pragmatic approach to supporting innovators and technology R&D.
Unless there is greater spending on R&D and support for innovation, there is unlikely to be much progress
in innovation, in practical advances and in the development of a national innovation system. The national
priority of diversification through innovation requires a fundamentally larger financial commitment in order to
realize the innovative potential of Oman’s private sector and industries. The lack of venture capital is
hindering innovation, although there is a project under consideration to establish a national venture capital
company.
An emerging innovation policy
Policies to improve the innovation climate and system are embryonic and fragmented. The most explicit
policy is the National Research Strategy, though the National Innovation Strategy is yet to be implemented.
The National Research Strategy is involving a steadily increasing number of researchers, and is aiming at
linking their efforts and activities with perceived needs. Unfortunately, the business sector is not sufficiently
involved in co-funding or in partnering in R&D work. The development of a national innovation system is not
yet integrated within national strategic planning and operational decision-making; it is critical that it become
a key component of the Vision 2040 mandate.
Implementation of policy measures appears to be relatively slow and stems from a cautious approach to
selecting projects and allocating funds. Other obstacles to implementation include cumbersome
bureaucratic procedures, as well as the political and social culture of risk aversion and consensus- building.
Overall public financial support to research and innovation remains quite small compared to, say,
developing the road network infrastructure. In private firms, there is little support or incentives for R&D and
innovation efforts. Public and joint public-private innovation support measures that aim at stimulating
university-business cooperation in R&D and innovation are critically needed. In the light of this situation, it
is important for the PDO to lead by example and expand its initiatives to increase its interaction with the
rest of the economy. Finally, the general public needs to be made more aware of innovation issues.
5. Pillars of strategic innovation
Policymakers in Oman will need to prioritize their actions in order to be effective and efficient. There are
three key areas that require their undivided attention; if left unaddressed, these could hamper the
development of a functional national innovation system. The three areas are the development of national
human resources, strengthening of the national IP system and invigorating economic diversification.
Human resources development
A major challenge for the national economy is the development of new industries to provide an increasing
number of higher productivity jobs and to accelerate Oman’s growth while gradually reducing the role of oil
production in the economy. This inevitably means fostering processes of innovation through the strategic
development of a national innovation system. It also means developing adequate human resources
capable of implementing such a strategy
Oman may be characterized as being simultaneously a labour shortage and a labour surplus economy.
Shortages arise because private sector employment opportunities are growing faster than Omani human
skills and capabilities. A surplus arises simultaneously, as many Omani nationals are reluctant to accept
offers of employment in the private sector in the hope that the Government will continue to provide
employment opportunities for nationals. Private sector employment is often seen as a temporary measure
while job-seekers wait for openings in the public sector.
From the point of view of the development of STI capabilities in Oman, the labour market suffers from two
basic imbalances. The first is that Oman’s education system produces too many graduates in the
humanities and liberal arts and a clearly insufficient number in technical and scientific fields. The second is
that Oman’s growing economy and relatively open job market attract foreign labour with qualifications up to
secondary school level that is willing to work for less than the prescribed minimum wage for Omani
nationals. The policy solution so far has been to hire the excess graduates in public service jobs and,
through the Omanization process, to encourage private firms to employ an increasing numbers of Omani
nationals. However, these solutions may fall short of what is needed to promote an innovative and
diversified economy, and move away from its dependence on oil revenues.
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xiii
The viability of the public sector as the “employer of last resort” depends almost entirely on oil revenues.
Strategies aimed at developing innovative and diversified industrial and services sectors and reducing or
replacing the role of the oil sector will need to consider the unlikelihood of the non-oil economy generating
sufficient profits to replace oil revenues. Technologically advanced and innovative products and services
capable of generating higher margins to replace oil revenues may not entirely fit in with aspirations to
develop labour-intensive sectors such as tourism.
A policy priority should be to reduce university enrolments in non-vocational studies, while placing greater
emphasis on education and training institutes to increase the production of expertise needed by firms and
industry. Achieving this requires active interaction between industry and educational institutions, which is
more likely to be achieved within the context of an innovation system strategy. The regulation of public
employment growth with a view to achieving quality public service, rather than as a means of managing
unemployment, could improve diversification and spur innovation. The Government and its education
authorities should offer opportunities for studies in non-vocational disciplines only if they are prepared to
provide public sector employment for the graduating students. Growth in public sector employment needs
to be regulated, bearing in mind future developments in oil revenues (as a result of the potential depletion
of oil reserves and volatilities in the global price of oil) which have enabled such employment growth.
The great majority of jobs in the private sector in Oman is held by non-Omanis, and is concentrated in
semi-skilled and skilled occupations where wages are fairly low. The general preference for public sector
jobs that offer better wages, benefits and working conditions diminishes progressively as people move up
the wage, education, skill and experience ladder. There have been proposals to bring remuneration in the
public sector in line with that in private firms. However a more realistic policy target would be to restrain
future increases in remuneration. While Omanization is a serious social policy concern, policymakers need
to be aware that the presence of a large and mobile foreign population is a source of diversity and can
create opportunities for innovation-based development.
Finally, in order to upgrade technological and innovation capabilities, raising the level of educational
attainment must become a central policy concern. This will require improvements in both the provision of
school education and in the take-up of educational opportunities by families and their children. It is
essential that the quality of teaching is improved and that national expectations concerning standards are
raised.
Intellectual property
A well-designed and properly implemented intellectual property rights (IPRs) framework can encourage
innovation and enable technology transfer. It should allow inventors and creators to focus on their
competencies and free them from the need to become entrepreneurs. For entrepreneurs, it should reduce
uncertainty in the commercialization of an innovation. From an economic development perspective, the
policy attention warranted by IPRs needs to take into account local specificities, as there is no universal
policy recommendation for all countries. An IPR framework requires committed support from policymakers
in order to become an effective incentive and enabler of innovation. Oman’s economy, outside the oil
sector, operates below the technological frontier, therefore increasing the innovation capacity of firms and
diversifying the economy will depend on the country’s ability to identify, import, adapt, absorb and diffuse
technologies, in addition to creating its own technological knowledge. Oman’s policymakers should
measure the success of implementation of IPRs by its socio-economic impact.
As an economy and its sectors and industries grow, IPRs increasingly become an integral and essential
part of a complex innovation system. Creating capacities to use IP instruments to promote and support
innovation is important at this stage of Oman's technological development. Policymakers should also
consider the necessity and complementarities of proprietary and public domains and their strategic role in
spurring competitive and innovation-based economic growth. Oman’s IPR policy needs to include an
overall strategic position on the issue of open access to ensure that publicly funded research outcomes can
be made publicly available. IPRs need to be seen as a critical policy component that will help Oman
become a knowledge-based economy with a functional national innovation system.
Current IP laws in Oman are generally compliant with conventions and obligations of the World Intellectual
Property Organization (WIPO) under the Agreement on Trade-related Aspects of Intellectual Property
Rights (TRIPS) of the World Trade Organization (WTO). However, this does not mean that Oman has the
capacity to take full advantage of its national domestic innovation potential, nor should the development of
an IPR framework in Oman be considered a done job. For example, building greater awareness about the
system of utility patents can encourage the notion of incremental innovation.
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Science, Technology and Innovation Policy Review - Oman
Oman is developing a number of research and innovation areas of strategic interest, and where IP needs to
play a paramount role, such as the Animal and Plant Genetic Resource Centre. Innovative uses of genetic
material in advanced agriculture and industry as well as in pharmaceutical development require a fully
functional IP framework. However, such endeavours also present a challenge, as outcomes with
commercial potential can be the result of a mix of traditional knowledge and research-driven efforts that
require the coexistence of a policy of openness with a policy that protects against unwarranted
appropriation.
Patents are a prime IP tool for fostering innovation and industrial development and diversification.
Policymakers, and in particular the Ministry of Commerce and Industry, which hosts the IP Department of
Oman, need to consider how deeply the currently non-existent capacity to evaluate and approve patent
applications is hindering innovation. It is also important to be aware that the application, filing and
maintenance of patents, in particular if a patentee seeks international protection, is a costly endeavour
unattainable for the majority of SMEs striving to develop IP on their own. Solutions to this problem range
from developing joint filings with other STI stakeholders, providing financial support, directly or through an
appropriate tax policy, and encouraging the broader use of national-only utility models.
In conclusion, development objectives require that the benefits of IP accrue to IP owners and to society as
a whole. Therefore, an IPR policy should bear in mind the need to create linkages between invention and
innovation on the one hand, and economic growth and diversification on the other. IP has become an
essential part of the globalized economy, and national and regional IP systems are becoming increasingly
connected. Such considerations underscore the need for a strategic approach to IP with clear objectives
and in concert with the highest level of policymaking for national development.
Diversification
Oman’s economy and export sector are not sufficiently diversified. Since 1995, Oman has managed to
increase the diversity of its exports which are now more diversified than those of Saudi Arabia, but below
the GCC average. While its increase in export diversification is evidence of progress, the current rate is
insufficient to meet the strategic goal of reducing the importance of the oil sector.
Economic development is fundamentally a process of structural transformation whereby countries innovate
and diversify from producing basic goods to increasingly more sophisticated industrial goods and services.
While domestic markets can play a role in stimulating demand for such a transformation, for small countries
like Oman, exporting and participating in global value chains are critical factors. Given the large export
earnings generated by the oil industry, reducing its significance and diversifying the economy cannot rely
on domestic demand alone; it will require the development of export-oriented sectors and industries.
Policymakers will also need to decide on the level and nature of involvement of FDI in their diversification
strategy.
They will also need to develop a coherent national innovation strategy and establish incentives for
diversification. Diversification through investment in innovation can be an important growth factor for
Oman’s economy if it results in the development of diverse industries that do not depend on the oil sector.
However, innovation is an uncertain process, and where it succeeds in creating new firms, the risk-taking
entrepreneurs will be unable to appropriate all the gains, as competitors will quickly emerge. Conversely,
when an innovation fails, the losses are fully appropriated by the original innovator. This unbalanced and
asymmetric condition is a known cause of underinvestment in innovation and is a factor that also inhibits
diversification. Intellectual property can help reduce such innovation risk and uncertainty.
Diversification highlights the need to develop and use a national innovation system framework to establish
and coordinate linkages among key stakeholders. In the case of Oman, institution-building may be
necessary, provided it is placed at the highest level in government – above the ministries – and reporting
directly to His Majesty Sultan Qaboos and his Cabinet of Ministers. A second prerequisite is to establish an
evidence-based policy management system that monitors and evaluates the progress being made across
targeted sectors.
A number of sectors and their potential for contributing to diversification are discussed in the main section
on diversification of this Science Technology and Innovation Policy (STIP) Review. However, it is important
to highlight here that, when considering sector potential, a central question for Oman’s policymakers is
whether it is wise and opportune to pick winners and start a specialization process without abandoning
broader diversification policies. Evidence from developed economies indicates that, beyond a certain level
of GDP per capita, technology specialization is a viable economic policy. While Oman may not be in such a
EXECUTIVE SUMMARY
xv
position today, it is not far from this point and policymakers will need to plan and prepare an appropriate
strategy in the not too distant future.
Labour and human resources development policies will need to be adjusted according to objectives for the
short, medium and long term, as diversification is a continuous process. This means increasing the level of
interaction between firms and educational and academic institutions in order to better match supply and
demand for new specializations and competencies, including the provision of training on entrepreneurship.
However, the idea that entrepreneurs can be formed in an educational environment is misguided, and,
while it should not be discouraged, encouraging newly graduated young Omanis to develop start-up
businesses if they cannot find employment opportunities is a suboptimal policy. The critical role of tacit
knowledge, uncodified and informal competencies that are acquired through on-the-job experience, should
never be underestimated.
6. Recommendations and conclusions
In a context where several simultaneous challenges need to be addressed, many measures can be
envisaged. However, it is important to identify what is essential and persevere, particularly because
Government capacities are limited. Such an approach must be supported by a profound process of change
management that will help identify the root causes of fragmentation.
Strategic prerequisites
Innovation should be at the core of the 2040 Vision. National mobilization is needed, along with a discourse
that will establish a common mission. Building a society and economy fully engaged in the global
knowledge economy by engaging in a number of bold reforms and programmes will make Oman a positive
example for the GCC region and beyond.
To realize this ambition, policymakers need to propose to the Omani society an Innovation Compact that
will highlight the following key concepts:
•
The Omani identity. The innovation policy should build on the image of an Arab country with a
maritime heritage, open to the outside world and confident of its identity, with an inner diversity and
ease of interaction with other cultures − an image particularly adapted to insertion in today’s global
economy;
•
The Omani sense of excellence. This should inspire all sectors of the economy and society, and will
act as a major foundation for international competitiveness;
•
The imperative of sustainability. What is usually an environmental issue will need to be expanded to
a broader concern about social and economic issues, such as the sustainability of quality jobs
offered to everyone, improved welfare for all, as well as sustainability of the national cultural heritage.
In order to implement efficient STI policies for boosting the economic development of a country, it is
necessary to have strong coordination from the very top of the State leadership, as illustrated by some of
the most emblematic development success stories, such as those of Finland, the Republic of Korea and
Singapore. In particular, the coordinating mechanisms put in place in Finland – a country functioning with a
consensus-based culture – can serve as an example of best practice for Oman. A key mechanism in
Finland is the Research and Innovation Council. 2 Chaired by the Prime Minister, and involving all key
ministers and heads of concerned agencies, as well as top representatives of businesses and civil society
(trade unions), the Council meets frequently to discuss the orientation and the state of implementation of
strategic decisions, such as budgets, sector reforms and new programmes. 3
In Oman, a similar mechanism could be established, which would report to His Majesty Sultan Qaboos.
The Grand Committee established for this UNCTAD STIP Review could constitute the nucleus of such an
institution, but enlarged to include other key ministers, such as the Finance Minister, and senior
representatives of the business sector, trade unions and civil society. It would need to meet regularly and
focus on strategic issues and decisions. It should not be involved in operational tasks and activities,
including the management of policy measures, schemes or incentives; rather, it should be concerned only
with broad resource allocations. It is important to emphasize that overall coordination does not mean
centralization, and particularly not centralization of funding for STI.
High-level coordination must not be allowed to devolve into committees that become discussion clubs
without sufficient ability or authority to implement horizontal and cross-sector programmes to counteract
fragmentation. To minimize this risk, the Omani innovation system is clearly in need of an entity entrusted
with a mandate to actively initiate and coordinate cross-sector programmes at the level of implementation,
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Science, Technology and Innovation Policy Review - Oman
to complement the strategic orientation role of the higher body referred to above. A stronger TRC, with the
status and capabilities that make it an effective counterpart to line ministries could play such a role. An
important future activity for TRC may be to introduce policy training at a high level in order to build a corps
of agents of change to ensure the sustainability of and commitment to agreed policies.
Regarding implementation, or the “how to”, international experience suggests that a pragmatic, gradual
approach, with clearly defined policy stages, should be considered. In a first stage, the national innovation
strategy would initiate well-targeted, micro and meso-level projects. When successful, they could help build
credibility and stimulate changes in attitudes, including among policymakers. A second phase could follow,
including developing a critical mass of projects, which would prepare the ground for a third phase, during
which broad reforms could be implemented. This approach suggests a short-term agenda with rapidly
achievable results mixed with a longer term agenda for deep transformations. To a certain extent, Oman
has completed the first stage and is ready to embark on the second stage. Regarding the substance of
policy actions, policymakers will need to adopt a holistic approach and address four critical issues:
1) The provision of adequate financial, technical and other support;
2) The elimination of obstacles to innovation, including a cumbersome bureaucracy and anticompetitive behaviours;
3) Increasing research efforts and technology and knowledge transfer from abroad; and
4) Strengthening the education system to provide needed technical and entrepreneurial
competencies.
Innovation agenda: Actions with short term-impacts
Harvesting low-hanging fruit means implementing measures that can have an immediate and important
effect on the economy. The major ones are lowering the price of Internet access, and increasing bandwidth
and geographic access to broadband. Most critical, however, is to put in place a framework for stimulating
linkages between ICT and innovation, especially with a view to developing content and creative industries.
Another set of measures that can bring benefits in a relatively short period of time involve projects
supported by the Industrial Innovation Centre and other incubating structures. An increase in success
stories will build awareness and generate pride and self-confidence, inspiring the youth of Oman to become
innovators and entrepreneurs.
Conducting an institutional audit is necessary to discover and eliminate obstacles of a formal and
informal nature. In the Oman economy and society at present, there are a variety of obstacles that deter
the establishment of an innovation climate. An institutional audit should be designed as a continuous
exercise with due follow-up mechanisms. Dissatisfaction and complaints of STI stakeholders are a
productive starting point. The goal is to identify regulatory, legal and behavioural obstacles to innovative
undertakings and remove them in a decisive manner without too much delay from excessively
considerate consultations.
Leveraging public procurement and infrastructure projects can promote innovative products through, for
example, requirements for tenders, the setting of norms for energy consumption, regulations for
environment-friendly materials, guidelines for food safety, and setting standards for work and safety
conditions. Procurement policies should be used to help SMEs upgrade their technologies or offer
innovative products. Recent measures reserving 10 per cent of public procurement for purchases from
SMEs is a positive policy development, and there should be a strong bias in favour of small and local firms
with innovation potential.
Innovation agenda: Actions with long-term impacts
Measures that can have a short-term and visible impact need to be complemented with actions with longer
term goals, possibly beginning with pilot initiatives for selected policy fields that require experimentation or
demonstration effects. Several possible policy examples are described as follows.
Stimulating youth creativity and entrepreneurship is a fundamental long-term goal, as creating a critical
mass of such people will take time. Vocational schools and business incubators that provide appropriate
coaching and support need to be multiplied in universities and colleges nationwide. The proposed
institutional audit should help reduce the obstacles of excessive bureaucracy and administrative burdens.
More effort is needed to reach down to the primary school level, and possibly even to early childhood
education. It is absolutely fundamental to develop the creativity of children by replacing rote learning,
involving repetition and memorization of texts and concepts, with experimentation and discovery.
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xvii
Strengthening R&D and innovation support comprises three different measures: (i) financial, in the form of
new funding schemes; (ii) technical, commercial and other support in the form of “local innovation houses”;
and (iii) strengthening leadership capabilities in their role of information gatekeepers. New financial support
schemes would foster university-industry collaboration in research on a shared (50/50) cost basis, and may
be added as a new initiative for TRC. Local innovation houses should support innovation initiatives aimed
at diversifying activities in the industrial, agricultural and tourism sectors, in particular outside the capital,
Muscat. Enterprise and institutional management acting as de facto communication gatekeepers are often
at odds with the reality of the increasingly networked nature of knowledge flows. Oman's policymakers
need to actively encourage an increase in interdepartmental, inter-institutional and interdisciplinary
communications among their staff and experts.
Launching a large-scale programme on environment stewardship will mobilize Oman’s creativity on issues
of global importance, and which relate directly to major problems it is facing now and, increasingly, in the
coming decades. Oman’s carbon footprint needs to be reduced, its agriculture is underperforming due to its
scarce water resources, and its public transport system is underdeveloped.
Fostering international and regional integration can be achieved through programmes of technology
transfer and support for joint R&D between foreign firms and local businesses and universities. Links with
international research networks need to be strengthened, as the smaller GCC economies, taken
individually, do not have the critical mass of researchers for many disciplines. Such activities are present in
the oil and gas sector, such as the National Oil Companies Technology Managers Group, and other sectors
should explore similar cooperation.
Developing evidence-based policies is needed to overcome difficulties in performing policy assessments
and reviews, such as this one. A lack of information on national science and technology assets, on
performances achieved in a number of domains (e.g. in innovation and education) is a great handicap for
policymakers. More than ever, countries base their policies on factual evidence. Oman needs to establish
R&D statistics and conduct regular innovation surveys. International education tests, such as the
Programme for International Student Assessment,4 allow policymakers to accurately measure performance
gaps and compare their results with a large set of countries at all development levels. Programme
evaluations are crucial, and it is recommended that such evaluations be conducted by third parties with no
vested interests in the outcomes. Finally, job creation and destruction will require close monitoring, in
particular when associated with concurrent innovation policies or disruptions from new innovation activities
or technologies.
An action plan for a national innovation strategy and system
An action plan for the development of a national innovation system in Oman will need to follow immediately
after a high-level policy decision to establish a national STI strategy as a primary lever for the innovationled development and diversification of the Omani economy. Given the demanding requirements that such a
strategy is likely to place on competencies, capacities, resources and funding, a strongly expressed
political commitment will be needed to reduce uncertainty and to mobilize and incentivize stakeholders.
An action plan needs to be elaborated at a level of detail that requires the intervention of policymakers with
the authority to earmark and commit funding and resources, and to assign responsibilities. The National
Innovation Strategy Action Plan (NISAP) for Oman will be the conduit for turning the outcome of the STIP
Review and the Oman National Innovation Strategy into a reality, with tangible and measurable outcomes.
For maximum impact, the NISAP will need to be comprehensive in both the changes it aims to trigger and
the stakeholders it needs to involve. Finally, the NISAP will need to address current needs but with a
long-term perspective, working towards Vision 2040. In this sense, it will need to anticipate newly emerging
opportunities as well as risks and potential barriers that are more than purely economic and commercial in
nature. It will also have to consider issues such as sustainability, finite natural endowments and shifting
politics in a multipolar world.
The development of the NISAP should follow quickly from the international and national presentations of
the STIP Review and the promulgation of the National Innovation Strategy – ideally within the first six
months and before the end of 2015. This assumes that the overall vision, objectives and strategy for the
innovation-led development and diversification of the Omani economy is in place, has been well
communicated and has broad support among all stakeholders. The NISAP will always be a work in
progress as institutional relationships evolve and learning processes strengthen. The NISAP will require an
effective planning group, and the STIP National Group may be a good starting point, given that it has a
diverse representation of Oman’s STI stakeholders.
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Concluding thoughts: communicate, inspire, and lead
To boost its innovative capabilities, Oman should, first and foremost, spearhead a change in mindset. In
concluding, the recommendations of this Review highlight three key words that should capture the attention
of the Government and guide its actions: communicate, inspire and lead.
Communicate. Developing a large media programme is fundamental. It is important to present innovation
campaigns, notably local success stories, in national programmes on television, using community radios to
reach traditional groups, and making use of Internet technologies and social media to reach the younger
population.
Inspire. The leadership, policymakers and government administrators need to set an example in all
aspects of work and life, wherever their functions lead them. They must include business communities,
academic circles and civil society groups, who should find as many opportunities as possible to cooperate
and express their creativity and sense of entrepreneurship.
Lead. The importance of an inspiring and efficient leadership will be key to igniting and sustaining the
required changes. Therefore, politicians, policymakers and administrators at all levels of government, from
the summit of the Sultanate down to the smallest villages, need to take on the challenge of the critical
leadership role they will play.
Chapter 1: Introduction
1
Part I. The national innovation system of Oman
1. Introduction
Government reforms, contributed to restoring calm
(Jeffreys, 2012).9
Located on the south-eastern corner of the Arabian
Peninsula, Oman occupies an area of about
300,000 square kilometres and has a population of
3.9 million inhabitants 5 The country has a long and
rich history and a tradition of exploration abroad,
with communities established along the coast of
Africa and in Asia. Its per capita income of
$21,390 6 is the result of robust growth in the
context of remarkable political stability experienced
since His Majesty Sultan Qaboos bin Said
ascended the throne in 1970.
Such economic growth is mainly due to earnings
from oil and gas exports. The oil and gas
extraction sector dominates the economy and
represents 51.6 per cent of GDP, 7 while the
services sector accounts for 34.9 per cent, and
construction, manufacturing and agriculture for
17.3 per cent.8 However, this development path is
unlikely to be sustainable for long. There are two
primary problems: in the short-term, the economy
is failing to generate enough jobs for Omani
nationals; in the long-term oil reserves will decline
and their exploitation costs will grow.
1.1 A problem of sustainability
The growth of the economy has been based,
particularly in the last decade, on the extensive
import of cheap labour, which now accounts for
about one third of the population. At the same time,
a high unemployment rate, which stood at 24 per
cent − and at 64 per cent among the youth aged
15−24 years – is indicative of the immense
employment challenge for the local population
(General Census, 2010; ILO, 2010). The lack of
employment opportunities was a major area of
discontent expressed during Oman’s “Arab Spring”
in 2011. An increase in minimum wages and
unemployment benefits, along with a number of
Adding to the problem is that the economy, as it is
structured today, is unsustainable in the long run,
since the forecast for proven gas and oil reserves
is only 15 to 20 years, 10 although probable
reserves, which better describe the reserves base,
are much larger. On a five-year rolling average, the
PDO is adding more proven plus probable
reserves than it is extracting. Nevertheless,
unbalanced oil-based economic development is
questionable from a long-term environmental
perspective. Oman ranks among the top 20
countries globally in per capita carbon emissions,11
and a growing and extensive urbanization trend is
resulting
in
correspondingly
high
energy
consumption, along with traffic congestion
problems.
The issues mentioned above are not specific to
Oman; they apply to other Arab Gulf countries as
well. Oil-driven growth and a very large proportion
of imported labour create problems that have
challenged, and will continue to challenge
Governments in the region (CMI, 2013). These
issues need to be addressed in view of Oman’s
specificities and the unique nature of its society
and culture.
1.2 The need for a new development strategy
His Majesty Sultan Qaboos and his Government
are determined to influence the development
trajectory of the country. The 8th Five Year plan
(2011−2015) has a series of key objectives,
including diversification of the economy, the
upgrading of human resources, support for the
SME sector and promotion of foreign investments
(see box 1 below). A number of possible strategies
aimed at diversification of the economy would
include the exploitation of recently discovered
Box 1: Eighth Five Year Development Plan 2011–2015
The 8th Five Year plan (2011-2015) has as its main objectives:
x
Realizing a growth rate of not less than 3% and low inflation rates
x
Boosting social development, to be granted priority in allocating government expenditure
x
Expanding new work opportunities for national workforce
x
Achieving full enrolment rates in general education, raising intake capacity of higher education and upgrading education
quality
x
Improving coordination between fiscal and monetary policies
x
Giving more attention to the regional and environmental dimensions
x
Increasing production rates of oil and gas and better managing reserves and power resources
x
Developing the sectors of tourism, industry, agriculture, fisheries and water resources
x
Stimulating investment of domestic and foreign private sectors and development of small and medium enterprises (SME)
x
Implementing strategies of scientific research and Oman Digital Society
x
Developing and raising the efficiency of the Governments administrative apparatus, upgrading the statistical work and
directing media activity to serve the development process
Source: Ministry of Information, www.omanet.om/english/commerce/econ1.asp.
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Science, Technology and Innovation Policy Review - Oman
mineral ores (copper and non-metallic), the
promotion of tourism, and the development of
agriculture and fisheries – a sector that contributes
only 1.2 per cent to GDP, but employs 5.2 per cent
of the active population.12 It is clearly necessary to
accelerate the structural transformation of the
economy, particularly in view of the need for job
creation. So far, the main strategic response by the
Government has been to introduce an active policy
of Omanization of the labour force, particularly in
the public sector and civil service. But clearly, this
alone will not resolve the more fundamental issues.
New activities offering quality jobs need to be
generated through a transformative economic and
social model with the establishment of an efficient
national innovation system at its core. This would
lead to a more diversified, more productive and
more sustainable economy, with better quality and
more attractive jobs. However, as experienced all
over the world, there are limits to the employment
opportunities
that
an
innovation-based
diversification process can generate. Among other
factors, global economic competition, the nature of
technological change and demographic trends will
influence the dynamics of transformation. This will
inevitably lead to a deep reorganization of the
conditions of employment and expectations of
education, leisure and pensions within a new
“social contract” (Dervis, 2013).
1.3 Outline of Part I: The national innovation
system of Oman
An analysis of the national innovation system is the
subject of Part I of this STIP Review of Oman. It
presents benchmarking indicators on the
innovation system of Oman that show low
efficiency in terms of innovation inputs/outputs.
This is followed by a discussion of the overall
framework conditions: the governance context,
infrastructure development, business environment,
human resources and research capabilities. It then
analyses the innovation system and the strengths
and weaknesses of key actors – the business
sector, higher education and research structures –
and their interactions. It also describes relevant
government programmes and policies, which are
still embryonic and need to be strengthened to
address the key issues identified.13
2. Overview of the innovation system
of Oman
2.1 Global innovation indicators
Acknowledging the key role of innovation as a
driver of economic development, policymakers will
require innovation indicators that go beyond the
traditional metrics, such as the level of R&D
funding. Given the multi-stakeholder nature of the
innovation system, indicators are necessary to
support policymaking based on measurable
evidence. A valuable resource in this respect is the
recently published Global Innovation Index (GII)
Report (Cornell University, INSEAD and WIPO,
2013), which presents about 80 indicators,
covering 142 countries, that detail components of
the innovation ecology, both from the input and
output sides (see box 2 below). A series of
innovation indexes can then be computed.
The data compiled in the input and output subindexes are both of an objective and subjective
nature, depending on the topics documented. The
“objective” data are quantitative measures
provided by international organizations on wellidentified physical or intangible elements (e.g.
school enrolments and Internet use).
The “subjective” data are mostly derived from
surveys of the opinions of business executives
(local and international) conducted by the World
Economic Forum (WEF). The latter have been
used in the Oman SRI International (SRI, 2011)
study.
It is instructive to position GII performances of
countries in relation to their GDP per capita. The
following groups can be distinguished: leaders,
learners and underperformers (chart 1). Oman is
located in the group of innovation underperformers,
along with other GCC countries such as Qatar,
Bahrain and the United Arab Emirates, along with
a number of other oil-rich countries such as Brunei
Darussalam, Kazakhstan and the Bolivarian
Republic of Venezuela. Chart 1 shows Oman’s
position based on a GII score of 33.25 and a
relatively high GDP per capita of more than
$20,000.
Box 2: The Global Innovation Index*
The Global Innovation Index is built on an innovation input sub-index and an innovation output sub-index.
1. The Innovation Input Sub-Index: Five input pillars capture elements of the national economy that enable innovative activities.
Indicators are provided on (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5)
Business sophistication.
2. The Innovation Output Sub-Index: Innovation outputs are the results of innovative activities within the economy. There are two
output pillars: (6) Knowledge and technology outputs and (7) Creative outputs.
3. The overall GII score is the simple average of the Input and Output Sub-Indexes.
4. The Innovation Efficiency Ratio is the ratio of the Output Sub-Index over the Input Sub-Index. It shows how much innovation
outputs a given country is getting for its inputs.
* Note: For details on all the data used for computing the different indexes and their values for Oman, see The Global Innovation
Index 2013 (Cornell University, INSEAD, and WIPO; 2013).
Chapter 2: Overview of the innovation system of Oman
3
Chart 1: GII scores and GDP per capita in PPP$*
Source: The Global Innovation Index 2013 (Cornell University, INSEAD, and WIPO; 2013).
* Note: Bubbles sized by population; country codes are ISO 3166.
2.2 Measuring Oman’s innovation system
Oman is ranked 80th on the GII, largely due to a
lack of efficient use of an environment and assets
that are advantageous from an innovation
viewpoint. When comparing rankings on the
input/output dimensions and the resulting ratio,
Oman scores 53rd for innovation inputs, but only
111th for innovation outputs, producing an average
rank of 80th in the global innovation index. In terms
of efficiency ratio, its ranking is low: 134th out of
141 surveyed countries.
The GII rankings are only indicative, and should
not necessarily be understood as an absolute
evaluation of the innovation environment. However,
they may suggest that Oman will need to scale up
its policy reforms process more rapidly in the near
future.
It is useful to compare Oman’s performance in
terms of the GII indexes and sub-indexes and their
components with that of other countries in the
subregion of similar size in terms of population.
Bahrain, Kuwait, Qatar and the United Arab
Emirates face, to some extent, similar challenges,
while Jordan and Lebanon do not have oil or gas
resources, but they have significant FDI inflows
(charts 2.a through 2.h). For the sake of
comparison with excellent performers at the global
level, Finland and Singapore have been added to
the picture.
Oman trails behind all the countries selected as
comparators, both on the GII and the innovation
4
Science, Technology and Innovation Policy Review - Oman
Chart 2: GII sub-indexes for Oman and selected countries, 2013
2.a: Institutions
2.c: Infrastructure
2.b: Human capital and research
2.d: Market sophistication
2.e: Business sophistication
2.f: Knowledge and technology outputs
2.g: Creative outputs
2.h: GII and innovation efficiency
Source: The Global Innovation Index 2013 (Cornell University, INSEAD, and WIPO; 2013).
efficiency index (chart 2.h). However, the picture
presented requires a nuanced interpretation. It is
interesting to observe that the United Arab
Emirates has a much better performance than
Oman on the GII (rank 38), but, like Oman, its
performance is modest on the efficiency ratio (rank
133). Kuwait performs significantly better than
Oman on the GII (50), while being very efficient (8).
Qatar is relatively well positioned on the GII (43),
but with a weak efficiency ratio (97). Jordan
performs somewhat better than Oman on the GII
(61), and is also much more efficient than Oman
Chapter 2: Overview of the innovation system of Oman
5
Chart 3: Innovation input and output scores
Source: The Global Innovation Index 2013 (Cornell University, INSEAD, and WIPO; 2013).
(73). Lebanon presents performances similar to
Oman on the different sub-indexes. The main
weaknesses of Oman on the input side appear to
be on the market sophistication and the business
sophistication indexes (charts 2.d and 2.e),
indicating that its economy may not be sufficiently
mature or adequately complex. On the positive
side, and this is important, Oman is relatively
strong on the institutions index (chart 2.a).
To conclude, in order to catch up with countries in the
Arab Gulf region, Oman needs to improve its
innovation infrastructure and climate and, most
importantly, augment its innovative outputs through a
more efficient use of its innovation assets (chart 3).14
2.3 The need for creative dynamism
On the output side the GII sub-indexes distinguish
between two types of outputs: the “knowledge and
technology outputs” (chart 2.f) indicator relates to
traditional innovative products, such as patents,
high-tech and other technology products; the
“creative outputs” (chart 2.g) indicator includes
trademarks, new business models, audio-visual
creations and online creativity, such as web sites.
Creative outputs embrace all forms of intangibles
which proceed from innovation processes that are
different from those leading to traditional
innovation outputs, as they are easily reproduced,
many having a digital incarnation and requiring
Chart 4: Global competition GII
Source: The Global Innovation Index 2013 (Cornell University, INSEAD, and WIPO; 2013).
6
Science, Technology and Innovation Policy Review - Oman
less finance to gear up for production. On
both categories Oman performs poorly, with
creative outputs faring slightly worse − ranking
119th − than knowledge and technology outputs
with a rank of 102.
From a more dynamic perspective, it is possible to
view the evolution of Oman’s innovation
performance in global GII competition compared
with that of selected countries (chart 4). When
looking at countries that are located near Oman in
terms of GII and GDP per capita – with a GII score
between 30 and 40 and GDP per capita of
$15,000−$35,000 – and which, for the most part,
are fairly dependent on oil and gas resources,
Oman performs worse than practically all countries
selected in the sample. The unfortunate reality is
that Oman is losing ground in the global
competition for innovation.
3. Framework conditions and the
national innovation system
Framework conditions constitute the overall
environment in which a national innovation system
functions. Innovation systems theory postulates
that the differences in innovation performance
between economies are largely due to differences
in how firms, universities, research centres, public
agencies, and other innovation stakeholders
interact, given certain framework conditions.
Indicators derived from the GII database and also
from the WEF database15 can be used to establish
the quality of key framework elements, including
the governance climate, the business environment,
infrastructure development, and human capital and
research. These are discussed below.
3.1 Overall governance
The State organization
His Majesty Sultan Qaboos bin Said is firmly at the
helm of Oman and benefits from a very strong aura
of prestige. His Majesty determines the strategic
course of the country, taking key decisions
expressed in the form of Royal Decrees after
consultations with concerned bodies. He
occasionally intervenes in questions directly
related to innovation and the business environment,
as described later in the section on government
policies and programmes. His Majesty Sultan
Qaboos is Head of State, Prime Minister, its
highest legislative authority and the Supreme
Commander of the Armed Forces and Royal Oman
Police. He is assisted by a Cabinet of Ministers,
which is responsible for developing and
implementing national policy on economic, political,
social, executive and administrative matters,
including proposing draft legislation.
The Council of Ministers is chaired by a Deputy
Prime Minister. Ministers enjoy considerable
autonomy in their fields of responsibility.
Particularly involved in the improvement of the
innovation climate are the Ministers of Industry and
Commerce,
Education,
Higher
Education,
Manpower, Agriculture and Energy. A Supreme
Council for Planning, which replaced the Ministry
of National Economy that was dissolved in 2011,
was established to promote national reforms to
address current and expected future challenges
related to social, political and economic issues. It is
charged specifically with development planning,
services sector development, economic affairs and
private sector affairs.
The Council of Oman, the highest level collective
policy entity, consists of two bodies: the State
Council (Majlis al Dawla) and the Consultation
Council (Majlis al Shura) comprising in total 167
representatives and policymakers. The State
Council members are appointed by His Majesty
Sultan Qaboos and are distinguished Omani
experts in their fields. The Consultation Council
members are elected to represent their wilayats
(districts). As of the Council’s fifth term starting in
2011, His Majesty Sultan Qaboos has granted it
new legislative and regulatory powers in a
significant step forward in the modernization of
Oman’s governance processes. The State and
Consultative Councils are now responsible for
proposing legislative and regulatory decisions to
support Oman’s development. However, there are
no firm indications that the Council is involved in
policy design, implementation and monitoring of
STI issues.
A number of agencies with varying degrees of
autonomy are in charge of specific economic,
social and technical issues. Among those of
particular importance for the innovation ecosystem
are The Research Council (TRC), which is in
charge of R&D strategy and policy including
innovation policy, the Information Technology
Authority (ITA), and the recently established Public
Authority for Small and Medium Enterprises
Development (PASMED). Chart 5 presents the
basic organization of decision-making in Oman.
Effectiveness of the political and
institutional environment
According to international benchmark indicators,
Oman has a relatively high level of political stability
as also the trust of its citizens in public institutions
and the political class. Moreover, there is
significant confidence in the independence of the
judicial system. There are 169 labour unions in
Oman 16 and an active tripartite process, “Social
Dialogue Oman”, which includes the Chamber of
Commerce, the trade unions and the Ministry of
Manpower. Oman performs relatively well on GII
indicators for the effectiveness of government and
Chapter 3: Framework conditions and the national innovation system
7
Chart 5: Organizational chart of decision-making in Oman
Source: Basic Statute of the State, Royal Decree No. 101/96.
the regulatory environment − a sure sign that there
is a strong government capacity to develop, enact
and enforce legislation.
An important point to emphasize is the long-term
and strategic planning approach that is
systematically implemented by Oman. First of all,
the adoption of a Vision policy initiated in 1996 had
a time horizon to 2020. A large number of the
planned objectives have been achieved, no doubt
financed from national oil and gas revenues. A
new Vision with a 2040 horizon is currently being
elaborated. Secondly, there are the Five Year
Plans that develop the Vision in operational terms,
and for various economic and social sectors. This
systematically structured, long-term approach is an
obvious strength and a significant positive
framework.
However, there are certain problems in
governance that, while not specific to Oman, need
the urgent attention of policymakers in order not to
squander the strengths of the 2020, and upcoming
2040, Visions. One of these problems relates to
decision-making processes, including interinstitutional consultations and joint policy
development. The hierarchical organization and
communication culture of certain institutions needs
to be changed to permit more effective
consultations and communication flows leading to
decisions.
Greater and faster horizontal communication will
also reduce the burden on the highest level of
policy-making to act as information gatekeepers on
levels of detail that are not meaningful in terms of
seniority and competence. Improving inter-
institutional communication practices is a
fundamental requirement for developing an
innovation system. Policymakers should therefore
try to overcome the natural tendency of their
bureaucracies to compartmentalize their work;
otherwise the lack of collaboration will hamper the
work of the innovation system, resulting in delayed
decisions and slow implementation of policies.
3.2 Macroeconomic context
Oman’s economic growth rate has been
maintained at a satisfactory level, at over 4 per
cent a year, thanks to a very active policy of
infrastructure development, including air and sea
ports, roads, water, energy and housing. Fuelled
by oil revenues, such investments have helped to
create jobs and wealth, with a positive impact on
trade, services and some manufacturing.
However, the underperformance of one of the main
macroeconomic components – the national labour
market – is among the major obstacles to the
development of the innovation potential of Oman.
Many new jobs have been filled by lower cost,
imported labour, which, given the liberal labour
regulations, is easy to hire and fire. Indeed, Oman
is the world leader on this GII indicator.
A liberal and open labour market is often seen as a
positive factor in international benchmarking on the
business climate. However, overly lax labour
regulations may raise issues relating to both the
treatment of foreign labour and the development of
a domestic labour force that is able to meet the
needs of an innovative, knowledge-driven
economy.
8
Science, Technology and Innovation Policy Review - Oman
A problematic labour market for innovation
and diversification
Economic growth based on importing a large
amount of low-cost labour is a strong disincentive
to innovation and technology-based growth and
diversification of the economy. A minimum wage
policy, established recently, has set a rate of OMR
325 per month. 17 While this represents some
progress, this rate is, nevertheless, quite low even
though local labour also benefits from various
social programmes that employers are obliged to
provide to Omanis, and which ultimately increases
the cost of employing them.
The Omanization policy, introduced in 198818 and
aimed at compelling the employment of local
labour, has had some positive results, while having
important goals. The proportion of Omanis now
employed in the banking sector has reached 90
per cent, in the oil and gas sector 65 per cent
(compared with a target of 85 per cent), in the
construction sector 10 per cent (compared with a
target of 30 per cent), but in the small business
sector it is only 8 per cent (compared with a target
of 30 per cent).19 This objective makes sense if the
increased staffing of Omanis in the productive
sectors of the economy leads to improvements, for
example in productivity and in business
sophistication. Improvements in qualifications,
skills and incentives are necessary throughout the
entire education system to respond to industry
requirements. The fundamental link between
productivity and remuneration needs strengthening.
Much remains to be done in this regard. At the
same time, given its oil wealth and development
goals, it would be counterproductive to rely too
much on the Omani labour force and isolate the
country from the global economy and migration
trends.
The dominance of oil wealth and other
constraints
In addition to labour market issues, there are
several other macroeconomic constraints on
innovation, especially the economic dominance of
the petrochemical industry and its oil revenues.
Such dominance creates disincentives to
innovation, because the economy grows mainly to
service this sector. Another problem is that fuel is
subsidized at OMR 450 per capita per year, which
deters private investment in the development of
commercial renewable and sustainable energy
resources. Aware of this, the Government aims to
use oil revenues to increase spending on research
and innovation of up to 2 per cent of GDP by 2020.
Some innovation has been achieved, such as the
use of solar steam generators to replace gas in
enhanced oil recovery. 20 Solar energy is getting
increasing attention from the public and private
sectors, but it is focused on applications related to
lighting and desalination, especially in remote and
off-grid areas. Outside the oil and energy sector,
industry has little interest in innovation, as
technology is largely imported, and technology
transfer often seen as the better and cheaper
solution.
The economy seems to be moderately affected by
the so called “Dutch disease”, by which an
increase in the exploitation of natural resources
(inducing a large inflow of income and a stronger
national currency) leads to a relative or, in extreme
cases, an absolute decline of the manufacturing or
agricultural sectors. This occurs through a
decrease in competitiveness of domestic sectors,
as imports financed by natural resource exports
become more affordable because of an
appreciation of the national currency. While this
process may be partially balanced out today by
importing low-cost foreign labour, the Dutch
disease phenomenon may become a more serious
issue in the longer term (Ebrahim-Zadeh, 2003).21
3.3 The business environment
An economic structure dominated
by large firms
The Omani economy is dominated by a few large
companies even though there are 91,000 active
SMEs contributing to 13.8 per cent of GDP. 22
However, the bulk of the small and micro
businesses are operating in the informal sector,
and only about 100 SMEs declare taxes. The
intermediary layer of firms is insufficiently
developed.
Specific factors, such as the country’s merchant
tradition and the current preference of Omani
people for employment in the public, rather than
the private, sector, largely explain the slow growth
of SMEs in the manufacturing sector. This is
because many public sector jobs offer better
salaries and benefits than private sector jobs, but
also, there are structural and institutional obstacles
to the development of SMEs, as discussed later in
the section on the business environment.
Multinational contractors and international firms
were the initial investors in the economy during the
1980s and 1990s, but since then there has been a
steady increase in the number of Omani
companies. At the end of 2013, the MSM 30 index
showed an increase of 18.6 per cent over the
previous year. The market capitalization increased
by around 21.4 per cent to reach OMR 14.2 billion
($36.9 billion) in 2013 from OMR 11.7 billion ($30.4
billion) in 2012. Outside the State oil and gas
businesses, private sector activity is steadily
growing.
An
indication
of
the
relative
size and importance of various sectors is
presented in table 1.
Chapter 3: Framework conditions and the national innovation system
9
Table 1: Revenues of Omani firms listed on the Muscat Securities Market, by sector
(millions of Omani rials and United States dollars)
Sector
1. Oil and Gas
2. Banks and Insurance
3. Telecoms and ICT
4. Engineering
5. Food and Agriculture
6. Metals
7. Power
8. Construction Material
9. Chemical, Plastics and Pharmaceuticals
10. Ports
11. Tourism
Total
Revenue (OMR)
1,251.8
840.7
669.5
402.0
389.9
386.3
259.0
172.0
118.8
69.0
39.6
4,598.6
Revenue ($)
3,254.7
2,185.8
1,740.7
1,045.2
1,013.7
1,004.4
673.4
447.2
308.9
179.4
103.0
11,956.4
Source: Thomson Financial (accessed November 2013).
The share of net foreign investment inflows in
gross domestic product (GDP) tends to fluctuate
substantially from year to year. This is probably
partly because of Oman having a small economy
without a major manufacturing sector, and partly
because of large outflows of remittances by foreign
workers. Those remittances in the form of net
income sent abroad reached OMR 3.1 billion in
2012 against OMR 2.8 billion in 2011.23 In addition,
there is a considerable amount of hidden trade,
and many Omani-fronted businesses are, in reality,
managed, and possibly owned, by foreigners.
An unfavourable business
environment for SMEs
According to GII indicators, Oman’s overall
business environment is satisfactory, at 45th place
in the rankings. However the business
environment looks less favourable in terms of such
indicators as conditions to start a business, getting
credit, venture capital deals, and other factors that
determine the dynamism and renewal of the
economic tissue through firm creation and growth.
There are few, if any, angel investors and venture
capitalists. The financial and banking sector needs
to strengthen its support for SMEs. At the same
time, public sector support for SMEs has been
modest, though recent decisions indicate some
improvement (see section on government policies
below).
The result is that many SMEs have not been able
to grow. Recognizing the potential contribution of
SMEs to diversification and growth of the economy,
and for increasing employment opportunities,
several measures are being taken to develop the
required infrastructure and devise necessary
policies for SME development. The Central Bank
of Oman has advised banks to allocate 5 per cent
of their total credit to SMEs by December 2014. To
encourage lending to SMEs, the prudential
requirement for banks to lend to such enterprises
has also been relaxed in terms of general
provisioning requirements and risk weighting.
Another problematic issue is the competitiveness
of the domestic economy and its markets.
According to business executive surveys reported
in the GII, the conditions of local competition are
moderately good (with a rank of 52 for intensity of
local competition). However, the absence of a
strong antitrust authority and an enforced
competition law impedes the creation of an
economic
environment
conducive
to
the
development of a dynamic SME sector, and
especially of innovative firms, as abundantly
demonstrated by the literature and by international
experience. 24 Also, bidding conditions and the
process for attribution of public procurement
contracts remain opaque. Finally, the protection of
IP is of functionally limited, even though the
perceptions gathered through international surveys
are positive. According to the WEF indicator on
perceptions of IP protection in Oman, including
anti-counterfeiting measures, Oman ranked 20th
out of 139 countries for IP protection in 2010, up
from 26th out of 133 in 2009. With a score of 5.28,
perceptions of Oman’s IP protection framework are
considerably higher than the average of 3.7.
However, local inventors and business people in
the SME sector are much more critical – a
divergence that can be explained by the biased
view of large firms’ executives responding to
international surveys. Part II of this report deals
more substantively with IP issues.
A risk-averse society
Entrepreneurship and innovation are not part of the
basic education, and are not seen as goals to
which people aspire in a society where oil wealth
makes people less eager to take risks. The result
is a strong preference for investing in tangibles, or
in short-term trade. People may not find sufficient
reasons to take the risk of starting or joining
10
Science, Technology and Innovation Policy Review - Oman
businesses if safe and well-paid public sector jobs
are available.
An important source of poor innovation
performance in Oman is the extremely risk-averse
disposition of entrepreneurs, financiers and
policymakers. This general assessment was
confirmed in a number of interviews during the
interaction of UNCTAD’s STIP Review team with
Omani stakeholders. Failure seems to be
perceived as an irreversible process, and this
strangles the development of tacit knowledge – a
major innovation component – as failures are
rarely translated into experience that can be used
to succeed in a subsequent iteration of innovation.
Policymakers need to lead in bringing about a shift
in broad societal attitudes towards risk and
uncertainty, as any investment in innovation is
fundamentally and potentially perilous.25
3.4 Infrastructure
Good physical infrastructure
Overall, the general physical infrastructure is
excellent. The quality of roads is high and
continuously improving. The electricity network
functions well, and distribution and consumption
rates (measured in terms of kilowatt-hours per
capita − kWh/cap) are high. The development of
such basic transport and energy infrastructure is
an asset for the country, as it helps to connect the
different provinces, and notably the interior of
Oman, with the capital. At the same time further
infrastructure development through major port,
airport and railway projects 26 can stimulate
economic growth. However, such activities have
only a mild impact on innovation and
entrepreneurship. Certain measures can be taken
to enhance the STI stimulus of an improved
physical infrastructure, such as public procurement
favouring local SMEs, and regulatory actions to
promote environmental norms and sustainable
environment-friendly
practices
during
the
construction and later, the use of infrastructure
facilities.
Inadequate digital infrastructure
In contrast with the physical infrastructure, the
current development of the ICT infrastructure
should be a source of concern. While mobile
telephone equipment is available and use is high,
as in the rest of the Arab Gulf region, indicators for
ICT access and use are not good (WEF/SRI).
Oman ranks the lowest of the GCC countries, with
a low broadband subscriber rate of just 2.7 per 100
inhabitants.27 Another key factor in broadband use
is
the
cost
of
connection.
Oman’s
telecommunications providers charge significantly
higher prices than those of their neighbouring
countries. In addition, GCC country providers
supply an Internet connection that is three to four
times the bandwidth speed of the Omani providers
(WEF/SRI). The monopolistic position held by the
national company, Omantel 28 (with government
ownership of 70 per cent) is an obstacle to
improving the situation, and the establishment of a
second private operator (Nawras, owned by Qatari
Qtel and partners) has not led to any significant
change in this situation. With the blocking of VoIP
channels – for example, Skype, which cannot be
used locally – Oman performs poorly on the ereadiness index, trailing behind other GCC
countries (WEF/SRI). 29 While government web
services are well developed, thanks to an active
policy of e-government (see section below on
government policies), there is a lack of vibrant
Omani ICT companies. Achievements are more
the result of government agencies’ internal efforts
than those of the private sector or of community
development (Andersson et al., 2010).
3.5 Human resources and research
An education system in need of reform
The performance of the education system requires
concerted policy attention aimed at substantively
improving educational outcomes. The need to
improve basic education in Oman is confirmed by
the
fact
that
most
tertiary
educational
establishments require their students to take
“foundation
courses”
before
beginning
undergraduate studies. Piecemeal information
from Trends in International Mathematics and
Science Study (TIMSS) produced by the
International Association for the Evaluation of
Educational Achievement (Boston) indicates that
Oman performs rather poorly in international
education tests. This seems to be partly explained
by the Omanization policy that, in the education
sector, has involved systematically replacing
foreign teachers with local ones, even though a
number of those local teachers do not have the
required level of competence. Another issue is the
tendency to focus on quantity rather than quality.
As the Omani system lacks accreditation
standards and mechanisms, and quality control
relies on an inspection system, foreign accredited
schools are now being established and private
schools are proliferating, with about 470 private
schools operating today.
In response, the Ministry of Education is in the
process of developing professional standards for
teachers, school principals and supervisors. These
standards will be important for helping to clarify
roles, evaluate staff performance and determine
needs
for
appropriate
staff
development
programmes. The Ministry is also developing
curriculum standards and assessment standards.
These should define for schools and the public
what Omani students of different ages are
expected to achieve in a range of important
Chapter 4: Key interactions I: Business and academia
subjects, and the progress expected of them from
year to year. The standards should also help to
establish the criteria for assessing the attainment
and progress of students at each grade level, and
form the foundation for a framework for evaluating
and managing the performance of schools and
teachers.
Tertiary education on the rise
Indicators on tertiary education present a
contrasting picture. The level of gross tertiary
enrolments is above the GCC average and is
increasing -- with a majority of female students.
The gross tertiary outbound enrolment (Omani
students going abroad) is good, and indicates a
satisfactory quality of learning. An increasing
number of students are choosing science and
technology (S&T) disciplines, although social
sciences continue to attract the majority of
students.30 Despite these positive trends, there is a
serious mismatch between the output of the
education system and the requirements of the
labour market, as in other Arab countries (Centre
for Mediterranean Integration, 2013; Andersson
and Abdelkader, 2012). Because of this, public
corporations and the private sector, which demand
competence and productivity, depend heavily on
foreign expatriates with tertiary degrees. The
public sector, on the other hand, makes only
moderate demands on workers and offers
generally high salaries. It therefore attracts a
number of Omanis who prefer working in the
government sector and civil service.
Limited research capacities
There are no statistics available on R&D efforts in
Oman. It is generally estimated that the country
spends 0.2 per cent of GDP on R&D.31 This is a
very low percentage, particularly considering the
level of GDP per capita, but it is in the order of
magnitude of other GCC countries. The extent of
sharing of R&D spending between the government
and the business sectors is not known. It is
possibly equally shared if one includes the public
oil and gas company, PDO, in the business sector.
The bulk of the public research infrastructure is in
the universities and in the government research
centres established for the agriculture and fisheries
sector. The total number of researchers in full-time
equivalent is estimated to be about 2,000
persons.32 The quality of the research institutions
is considered to be broadly comparable to that of
the other GCC countries (WEF/SRI).
11
creative goods and services such as media
products and web services. The foundations of the
innovation system seem fairly weak based on data
such as the knowledge capabilities of firms
(expressed as the number of knowledge workers
or R&D performed by businesses) and knowledge
absorption, as measured by imports of ICT
services. On the other hand, innovation linkages
seem to be growing, with increasing universityindustry research collaboration and within jointventure strategic alliances, mainly in the energy
sector. However, the depth of such inter-linkages
seems to be modest. This section examines in
more detail the strengths and weaknesses of key
actors of the innovation system and their
interactions. It makes extensive use of the
information gathered by the UNCTAD mission’s
field interviews.
4.1 Business and industry
Oman’s economy is dominated by large firms that
operate mainly in the petrochemical and natural
resources, construction and trade sectors. The
innovative activity deployed by such holdings is not
negligible, but it is insufficient to spur innovation
throughout the economy and buttress the
functioning of a meaningful national innovation
system. The innovation that takes place mainly
benefits several large firms and the companies
operating under their umbrellas. This part of the
assessment is largely based on discussions
between business leaders and UNCTAD experts
held in May 2013, and is qualitative in nature. It
also presents a summary of key issues
and concerns.
Large Omani companies: Cautiously
engaged in innovation
4. Key interactions I: Business and
academia
The Government has majority (60 per cent)
ownership of Petroleum Development Oman
(PDO), in addition to stakes in Royal Dutch Shell
(34 per cent), Total (4 per cent) and Partex (2 per
cent). PDO dominates the oil and gas sector and
has a solid R&D infrastructure. It has been
developing advanced technology for enhanced oil
and gas recovery. So far, such technology seems
to have been used only by Shell for its own
operations worldwide. There are few, if any, spinoff businesses emerging from this innovative
endeavour. Contacts and joint work between PDO
and university and other R&D structures seem to
be limited. More generally, PDO seems to function
as a kind of isolated island within the Omani
innovation system. A few large private holdings
and conglomerates have ventures in many diverse
fields as described in box 3.
Most indicators of the GII assessment show
modest performance on knowledge and innovation
outputs, such as scientific articles, patents or the
manufacture of technology products, as well as on
The UNCTAD team visited several companies that
are parts of these holdings, including Bahwan
Engineering Company (BEC). BEC illustrates well
the modus operandi of large Omani industries. It is
12
Science, Technology and Innovation Policy Review - Oman
Box 3: Omani private sector holdings
The Shaksy Group holding company was founded by Said bin Salim Al Shaksy and has interests in companies operating throughout
the GCCs since 1976 including several Joint-Stock Companies, Al Bank Al Ahli Al Omani SAOG, Oman Fisheries Co. SAOG, and
Oman Hotels Co.. The group includes also Shaksy Engineering Services, Hani Projects and Marketing, Midwest Oilfield Services,
Hani Oilfield Supplies & Services, Western Engineering, and Scitech Laboratories.
Another much diversified company is The Suhail Bahwan Group. Established in 1965 in the Muscat Souk, it is today a large operation
in engineering and construction, manufacturing and industrial investments, information technology, trading, and specialized services
activities. The Suhail Bahwan Group comprises more than 40 companies with a combined annual turnover of more than $3 billion
(2008). It is particularly active in fertilizer production projects, in Oman and internationally, and it plans to become one of the largest
urea producers of the world.
Mohamed & Ahmed Alkhonji LLC (MAA). MAA is a contracting, technology-based products and services company, offering a wide
range of products and services for machinery, engineering, automotive, building and construction, and health and safety markets.
Founded in 1920 as a trading organization, MAA is fully private owned and controls its own capital.
engaged in very diverse activities, including
manufacturing, chemicals (urea, sulphuric acid),
services, and travel and tourism. The company
started out as an air conditioning service company
in 1977, and it now employs 20,000. While it has
600 engineers, there is no in-house R&D. The
introduction of new technologies is mainly
accomplished in joint ventures with international
partners, and therefore there is little incentive to
innovate inside the firm or in cooperation with other,
smaller firms, R&D entities or academia. For
example, in enhanced oil recovery, BEC has been
partnering with SNF France for using polymerflooding technology. Local subcontracting is
managed by an “in- country value” policy, whereby
local suppliers are preferred even if their prices are
higher − but only up to 10 per cent higher − than
the best international price.
The private sector is perceived by dynamic
segments of the economy as relatively
conservative: many top executives in the large
companies have a hierarchical, top-down style of
management. Large Omani firms are generally
managed in a reactive manner, adjusting to
changes after the fact, instead of leading through
innovation. This does not encourage spin-off
activities, or fruitful subcontracting and linkages
between large and small firms. Local demand for
innovation is poor, as there is an overwhelming
preference to conduct any technology transfer
through international trade.
Limited technology transfer and
upgrading via FDI
Many, if not the majority, of the large firms in
Oman have some kind of joint-venture
arrangements with foreign partners, and work
under their technological guidance. For instance, in
the engineering field, most companies work on
design plans provided by foreign partners. In
general, there are no particular obstacles to this
kind of cooperation to develop indigenous
technological capacity. However, problems arise
when such international partnerships are expected
to interact and support the domestic SME sector
and bring it into the value chain in a supportive role.
Outside the petrochemical industry interactions
are low.
Another issue relates to fiscal and other incentives
to enhance technology through joint ventures and
FDI activities. One important obstacle is that the
export promotion agency, PAIPED, has no
authority to negotiate on the responsibilities of joint
ventures and FDI firms or to propose incentives,
while the authority for negotiating these is
fragmented among different ministries. A number
of large international technology companies that
are active in the GCC region are based in Saudi
Arabia, rather than in Oman, as Oman offers a
relatively small domestic technology market. In
addition, regional cooperation processes in the
GCC are weak, with most firms and institutions
looking to partner outside the region rather than
among each other.
Uneven distribution of laboratory
and testing facilities
The basic laboratory and testing facilities available
in Oman seem to be well equipped, according to
the firms and universities visited by the UNCTAD
mission. However, for larger scale and more
sophisticated equipment, facilities in the United
Arab Emirates or Saudi Arabia are used. There are
some private facilities to serve the needs of
industry, such as Scitech Laboratories, a
multidisciplinary facility based in Muscat.
Established in 2007, it provides testing services to
industries, for example for construction materials,
and
for
chemical,
environmental
and
microbiological testing. Scitech Laboratories has
an ISO 9001: 2008 certification and is a partner of
the Chinese Certification and Inspection Company.
While large companies operating in the
engineering, building, chemical and related sectors
may be adequately served by the existing
laboratory and testing services, there are no
independent facilities for prototyping, which
remains a major problem for the SME sector and
for aspiring innovators. Such activities are often
Chapter 4: Key interactions I: Business and academia
outsourced abroad, with Malaysia cited as one
destination. Innovation projects that are funded
through TRC can have their prototyping
outsourced worldwide, according to the innovator’s
preference, on the condition that comparable
facilities are not available locally and high
standards of execution are maintained. Several
sectors also lack certification and standards
structures and procedures. Those that exist, as in
the PDO, are not available to firms outside the
business network or holding, and therefore exclude
most SMEs.
Industrial and technology parks
and free zones
Today, much of Oman’s industrial activities take
place in one of eight industrial estates – Rusayl
(near Muscat), Sohar, Raysut, Sur, Nizwa, Buraimi,
Al Mazunah and Smail. Oman also has four free
zones, in Salalah, Sohar, Al Mazunah and Al
Duqm. The Oman Public Establishment for
Industrial Estates (PEIE) supervises these sites.
Additional free zones are being planned in border
regions, and business centre facilities are being
developed for visiting entrepreneurs exploring
opportunities. Their role in industrial growth is
important, especially since the oil and energy
sector, being capital-intensive, does not generate
many jobs.
A recent development has been the establishment
of a ninth high-tech industrial estate − Knowledge
Oasis Muscat (KOM), a technology park located
near Muscat and close to the Rusayl Industrial
Estate, Innovation Park Muscat and Sultan
Qaboos University. It provides office and business
incubator accommodation to technology-oriented
businesses, including technology start-ups. KOM
currently hosts more than 60 firms. Despite its
location, however, few links and synergies with
academia have evolved, associated foreign
companies appear to have a weak presence and
hardly any R&D, and the incubation efforts are still
at an early stage.
As for free zones, this is a relatively new concept
for Oman, as the legal framework was established
only in 2002 through Royal Decree 56/2002. The
goal of the free zone policy is to attract FDI by
providing a receptive business environment. FDI is
attracted more to free zones than to industrial
parks, as the former have no requirements
concerning local linkages, labour or sourcing.
While technology transfer occurs through
investment – for example OCTAL has a $5 billion
polyethylene investment operating since five
years in Salalah Free Zone – the Government
could play a greater role in facilitating
such transfers.
There are a number of fundamental problems
common to the industrial estates and free zones.
13
There is considerable independent action and a
low level of collaboration, along with the lack of a
strategic perspective among firms. Sector
development is focused on mining and services,
and construction materials, with modest innovation
ambitions. With regard to SMEs, their activities are
poorly linked among each other as well as with
sector stakeholders, and many of them are very
traditional in their business approach and not
innovative. A recent survey of PEIE tenants
showed no investment in product design,
innovation or productivity. There were no IP issues
raised by any of the constituent businesses,
indicating a low level of technology transfer.
Representatives of parks and zones maintained
that a higher level of system-wide leadership on
innovation strategy was needed, while support at a
single
ministerial
level
was
welcome,
but insufficient.
Efforts are being made for setting up SME
incubators, such as in the Salalah Free Zone, but
many requests for incubation come from
entrepreneurs with academic knowledge and
modest entrepreneurial and practical experience.
To remedy this, PEIE provides some skills training
for industry needs, such as ethical business
practices and the creation of business
opportunities. It is clear that SME start-ups require
more than physical space; they also need advice,
coaching and contact with venture capitalists.
Often, firms have to provide full logistics
themselves, such as transport (for workers),
catering and medical services.
Free zone representatives suggested that a major
obstacle to enhancing technology transfer is the
quality of education, and were concerned that,
SQU, for example, does not produce graduates
with competencies relevant for firms. For example,
communication skills are generally missing and
curricula do not contain courses on business
practices, management skills and business
research skills. It is not helpful that firms do not
participate in curriculum development for schools
and universities. As mentioned earlier in this
review, there is a need to improve cooperation with
universities on R&D and technology adaptation
and innovation.
On several occasions, PEIE has arranged for
private financing to enable the development of
particular firms. PEIE estimates that the success
rate of SME start-ups is about 50 per cent after
three years, which is the time allowed in the
incubator. Such a success rate is fairly high by
developed-country standards, but it suggests that
new businesses are not innovative and do not
seek risk and opportunity with the same eagerness
as their peers in more developed economies. For
example, the Silicon Valley start-up incubator
Y Combinator33 has a 93 per cent failure rate of its
investments after five years, and this is based on a
14
Science, Technology and Innovation Policy Review - Oman
highly selective acceptance rate, where, on
average, one in twenty applicants are accepted for
incubation. 34 Similarly, the United States National
Venture Capital Association estimates that only
one to two out of ten businesses backed by
venture capital produce substantial returns.35
Several private and State-owned firms suggested
that the agendas of PEIE, PAIPED and MOCI
would benefit from better synchronization and
coordination. In particular, the UNCTAD mission in
December learnt that the free zone relationship
with PAIPED was dormant, and that its role was
not clear to firms and entrepreneurs. Given this
situation, the Supreme Council should revise
instructions on commitments under Vision 2020
and agree on a global framework linking all the
above agencies for the joint promotion of Oman.
Between the contrasting opinions, on one hand
that promotion is a solitary effort and on the other
that over-coordination can be a disincentive to
entrepreneurs, there is considerable middle ground.
Creating new business opportunities through
innovation, rather than linking existing SMEs which
may be competing at similar low-technology levels,
requires deeper consideration. There is also an
element of competition among parks and zones,
and therefore third parties, such as PAIPED, are
not always involved, as negotiations with clients
are often confidential.
With regard to clustering, surveys by WEF give
high scores to Oman. 36 This seems to be mostly
due to the development of industrial parks, as
described above. Certain sectors, such as fisheries
and aquaculture, could only develop in a cluster
with related services. However, according to
experts and entrepreneurs whom the UNCTAD
mission met, there seems to be little collaboration
among clustered firms, and more effort is required
to generate real results, including engaging in
international collaboration with foreign firms,
universities and research institutions. This is
clearly an area where cross-cutting policy action
will need to match efforts at physical clustering,
and where an innovation system strategy may offer
better results.
4.2 Higher education and research
Relatively well-developed university
and colleges
The first public university in Oman, the Sultan
Qaboos University (SQU), was founded in 1986.
SQU has nine colleges: Arts and Social Sciences,
Economics and Political Science, Education, Law,
Nursing, Agriculture and Marine Sciences,
Medicine and Health Sciences, Engineering, and
Science. It also runs a number of research
centres.37 And there is a university hospital on the
campus. SQU is open to Omanis only and hosts
more than 15,000 students. The first year of
studies is a foundation year and focuses on the
study of English.
The Ministry of Higher Education administers six
colleges of applied sciences in regional centres
outside Muscat, in Ibri, Nizwa, Salalah, Sohar, Sur
and Rustaq. Their goal is to build capabilities
in
international
business,
communications,
information technologies, design, engineering,
applied biotechnology and education. The total
number of students is about 8,000.
The Ministry of Manpower operates the Higher
College of Technology in Muscat and six colleges
of technology in the regional centres of AlMussana, Ibra, Ibri, Nizwa, Salalah and Shinas.
The programmes for the colleges were designed in
cooperation with various industrial sectors in 2003
to respond to industry needs. They have a total of
40,000 students, and some 4,000 diplomas are
awarded each year. The rate of employment of
those leaving the colleges with a diploma reaches
65 per cent, but it is uneven, depending on the
disciplines, the highest rate being for engineering
graduates. The Higher College of Technology in
Muscat is the second largest higher education
institution in Oman with 7,300 students.
In the National Project Program, a training
curriculum is being designed and developed jointly
by a firm and a private training institute to meet
specific needs for particular jobs. The Ministry of
Manpower allocates Omani job-seekers to study
the approved occupational programmes along with
the necessary financial support. After follow-up
and evaluation by the Ministry, successful
graduates are hired by employers in the
concern/industry. On average, 3,000 Omani jobseekers are improving their qualifications and
finding jobs through the National Project Program
every year.
Several government bodies run their own training,
research and academic programmes. The Ministry
of Health runs a number of health institutes to
prepare nurses, paramedics and pharmacists. The
Ministry of Awqaf and Religious Affairs operates
the Institute of Sharia Sciences. The Central Bank
of Oman runs the College of Banking and Financial
Studies.
There are also 19 private colleges and 7
universities, which respond to popular demand for
studies in business administration, engineering
and computer sciences. Generally affiliated with
European, Australian or American institutions, their
language of instruction is typically English. Two
illustrative cases are the German University of
Technology, affiliated with Aachen, which hosts
650 students, and Al Sharqiya University, a private
university established in 2009 in Ibra in
Chapter 4: Key interactions I: Business and academia
cooperation with Oklahoma State University and
Texas Technological University, which has 1,200
students.
Higher education, research and
innovation: Mixed experiences
In order to grasp opportunities and obstacles
facing the development of higher education in
Oman, the UNCTAD mission visited several
important establishments of diverse size, status
and orientation: SQU, University of Nizwa, the
Caledonian College of Engineering, and the
German University of Technology. The following
are brief descriptions of its findings.
SQU has acquired a reputation in the Gulf
countries for the quality of its academic
programmes, and ranks 50th among Arab
universities. At the same time, it is confronted with
a number of issues.
x The teaching staff numbers about 1,000
lecturers and professors, with two thirds holding
PhD degrees. A significant proportion of the
faculty used to come from foreign countries,
including developed economies. However, in
recent years there has been a significant
turnover of lecturers and professors – more
than 25 per cent a year. This worrying trend
seems to be due to low salaries for the
teaching staff, compared with those offered by
other establishments in the region (Qatar,
United Arab Emirates and Saudi Arabia), and
also to unfavourable working conditions that
are affected by a heavy administrative burden
and excessive bureaucracy.38
x Over the years, SQU departments have built
research capabilities. However, due to their
time spent on administrative and teaching tasks,
there is little research conducted in the
university departments, although several
research publications have been launched. To
remedy this situation, SQU is working on
establishing “research only” academic staff,
and the Government is providing incentives for
research activities, some of which are
described in the section on government STI
policies. Indeed, SQU receives the bulk of the
funding of TRC research programmes.
x Contacts with other academic institutions in
Oman are developed principally on a personal
basis, and do not lead to much effective joint
research or to an effective and efficient use of
research infrastructures and facilities, including
laboratories and equipment.39
x Contacts for research projects with the
business sector remain few and are rather
informal. Researchers are more interested in
publishing in international journals and
participating in conferences. A number of
projects are developed with the Industrial
15
Innovation Centre, and SQU has established
an IP office to advise on and manage IP issues.
x International cooperation takes shape on an
occasional basis through formal networks
established principally in the Arab world, and
notably in the Gulf region, for instance with
universities in the United Arab Emirates, on a
50/50 cost and outcome-sharing basis.
The University of Nizwa (UoN) was established in
2002 as a private, non-profit entity. It is located
250 km west of Muscat in the old inland capital of
Oman, which has a historic tradition of teaching
and instruction in the disciplines of law and
government. The university aims to serve both
national interests in specific needs and the
development of the surrounding region.
x While R&D structures are established in UoN in
order to collaborate with firms, a culture of
cooperation and links with industry has not yet
developed. Most companies in and around
Nizwa are very small and few have the capital
and the capacity to support research. There are
some research proposals for tourism, but there
are difficulties in demonstrating value added to
firms A Centre for Consultancy Studies has
been established recently, which provides
mainly feasibility advice, and has cooperation
arrangements with the Industrial Innovation
Centre (IIC) and TRC on the crafts industry and
agriculture and fisheries.
x In order to finance its activities, UoN is also an
investor, and is embarking on developing a
retail business which it proposes to use for
training in entrepreneurship and commercial
disciplines to complement its academic
programme. It is also setting up an incubator
for businesses and innovation-related R&D
projects. In addition, it is developing
cooperation with suppliers and producers of
technical equipment used in research with the
aim of becoming a training centre for
equipment operators.
x Although it is a private entity, UoN is very
closely supervised by the Ministry of Higher
Education. There have been comments that the
Ministry is adopting a micro-management
approach, leaving little autonomy to the heads
of establishments, and taking on a decisionmaking role relating to non-strategic issues
such as conference programmes, speakers and
related expenses. 40 This presents the risk of
the Ministry losing sight of broader strategic
issues by being bogged down in the details of
governance of establishments, which can be an
arduous task, unnecessarily using up resources
while slowing down progress in programme
implementation.
16
Science, Technology and Innovation Policy Review - Oman
The Caledonian College of Engineering (CCE) was
established and funded by the GALFAR
Engineering and Contracting Company, and
provides courses in several fields of engineering
and technology, principally to train students and
staff for its own needs. A number of concerns were
raised by the CCE leadership:
x A general issue raised by CCE is the relatively
poor quality of primary and secondary
education. While the CCE has supported
planned policy changes to develop a unified
standard curriculum, in tackling this issue today
CCE requires its entrants to complete one
foundation year of study.
x The modest level of cooperation with industry is
a major concern. At the time of writing this
review, there were 19 projects with industry
funded by the IIC or TRC and other
organizations like Middle East Desalination
Research Center totalling about OMR 2.4
million. The CCE indicated that it basically
responds to industry needs and has some
experience in tackling problems in process and
transport engineering. The main obstacle to
becoming more innovative and proactive is staff
with the right skills and knowledge, lack of
motivation and insufficient incentives for
graduating engineers to continue with research.
x Entrepreneurship courses are obligatory for
engineers, and the CCE has a Centre for
Creativity and Innovation as well as small-scale
incubation facilities. The biggest challenge is to
develop operational linkages with like-minded
institutions.
The German University of Technology (GU Tech)
was established in 2007 in collaboration with
Rheinisch-Westfälische Technische Hochschule,
Aachen University, a leading technology and
research university in Germany. In the fall term of
2012, approximately 650 students were enrolled at
GU Tech and 2,000 students are expected in 2014.
It offers BSc programmes in process engineering,
environmental engineering and mechanical
engineering and an MSc programme in Petroleum
Geoscience. Curriculum development and delivery
is overseen by Aachen University, and most of the
professors are on secondment from that University.
Several issues that could affect STI policy were
raised in discussions with the STIP Review team.
x A major problem in primary and secondary
education is that it produces a very low quality
of university entrants, in particular from State
secondary schools, so that most require
foundation studies to prepare them for their
degree programmes.
x Most activities are focused on education,
though some research activities are starting
and some innovation activities are in the
pipeline. One such project is the passive eco
house research project, but it does not seem to
have much market demand and potential for
commercialization.
x In its interaction with STI stakeholders, GU
Tech is in contact with TRC, but appears to
have had difficulty in reaching and influencing
decision-makers involved in urban and
infrastructure planning, notably the Supreme
Council.
x GU Tech has developed collaboration with
SQU on geological and seismic research. The
success of collaboration tends to be based on
personal contacts while formal cooperation
channels are not working as they should.
x Research staff are in short supply.
The following are a few common problems that
emerged from the above observations:
1) A general problem is the poor level of
language and maths skills of students
entering universities, which makes it
necessary to offer them foundation courses to
give them a minimum level of competencies
in these subjects.
2) It
is
difficult
for
higher
education
establishments to engage in research and
innovation activities that are directly pertinent
to the needs and demands of the local
economy and industry.
3) Grooming and retaining research staff within
the
educational
establishments
pose
particular problems, often due to insufficient
incentives.
4) Formal relationships appear to be difficult, as
government bodies appear to be distant, and
sometimes
those
relationships
are
unwelcome and bureaucratic. Thus any
success in cooperation often depends on
personal relationships.
Labour, technology and education:
Ongoing issues
The UNCTAD mission observed that linkages
between labour and technical education and
training are underdeveloped, and that the
technological needs of economic sectors vary
widely. Underdeveloped regions, which lack large
businesses, have fewer jobs available, and job
opportunities associated with the knowledge
economy are generally lacking. It is difficult to link
higher education to innovation when incubators
established at technical colleges cannot find firms
interested
in
cooperating
beyond
some
involvement in the design of curricula. Even simple
activities, such as placing students in internships in
companies, seem to be a challenge, as there are
no legal obligations for firms to offer internships.
Foreign managers do not seem particularly
Chapter 5: Key interactions II: Government policies and programs
interested in training Omani students, as job
vacancies can be easily filled by foreign workers.
As long as salaries differ greatly between private
and public sector jobs, especially as lower qualified
Omani nationals are better paid in public service,
while those with higher qualifications are better
paid in private and foreign firms, there will be
persistent tensions in the labour market. The
Ministry of Manpower is the main mediator in wage
negotiations, but it will be difficult to solve this
problem if this Ministry cannot coordinate with
other entities such as the Ministries of Commerce
and Industry, Agriculture and Fisheries, and Higher
Education, as well as the Chamber of
Commerce.41
There are also a number of non-technical issues
related to attitudes and work ethics, which point to
a suboptimal level of professional commitment. It
was reported that the youth felt rejected in firms,
as the attitudes of employers were sometimes
influenced by the corporate management practices
of expatriate experts or executives, or due to
inadequate training in management skills and
competencies of nationals. Revised legislation and
perhaps a new labour law would be needed to deal
with equitable treatment and improved labour
inspections, as well as social corporate
responsibility. As previously noted, Oman has an
active tripartite social dialogue and a culture of
consensus-building that would prove useful in
developing a dialogue to address the linked
problems of education, behavioural attitudes and
employability issues.
4.3 Conclusions
In conclusion, although the information on the
innovation system is cursory and piecemeal, a few
major weaknesses can be discerned. Firstly it is
seriously fragmented. There seems to be
insufficient cooperation between key entities
(between academic and business structures,
between academics themselves and among
businesses), and where it exists, it is often on a
personal basis. Secondly, most of the research
bodies are rather small, and a more disconcerting
issue is that it seems difficult to expand them, due,
notably, to the salary structures in the economy as
a whole. Thirdly, currently there are not many
innovations and innovative undertakings, and at
least not a critical mass to enable virtuous
clustering processes to take place.
There are also several positive features. Although
not very innovative, the large Omani companies
demonstrate an inner dynamism that should be
exploited. There is a clear understanding of
problems in most of the concerned communities, in
the business sector, and in the academic world
and the Government. And last, but not least, there
is a significant internationalization trend of the
17
whole innovation system and its components. This
source of dynamism and change should be further
exploited.
5. Key interactions II: Government
policies and programs
5.1 Policymaking institutions
Main entities
The key body for science, technology and
innovation policy in Oman is TRC, which was
established in 2005. It has an atypical position in
the Government in that it does not have the status
of a ministry, but is more of an adjacent body
chaired by His Highness Sayyid Shihab bin Tariq
Al Said as high-level adviser to His Majesty Sultan
Qaboos. A staff of 170, led by a secretary general,
manages TRC and administers its programmes.
TRC acts both as a policymaking and a funding
institution. It has three main departments: the
research department, the innovation department,
and the international relations department. It has
an International Advisory Board comprising several
internationally renowned experts in science and
science policy.
Other important bodies involved in supporting
innovation or improving the innovation climate
include the IT Authority, the Ministry of Industry
and Commerce and the Ministry of Higher
Education. The Education Council of Oman is
charged with the advancement of the education
sector at all levels and types, and serves as an
umbrella organization for education policy
development, analysis and implementation. The
Council seeks to ensure that the development of
the education sector is in line with national
economic and social priorities.
Lack of coordination
It is difficult to evaluate an administrative and
political system without a good understanding of
how its formal and informal contacts, information
channels and networks function. However, from
what is observable in terms of policy initiatives, the
conduct and management of STI policies appear to
be rather uncoordinated. There is not much
duplication, because administrative territories have
been relatively well defined and distributed among
ministries. But in the absence of an overall STI
strategy, policies conducted in each ministry and
related agencies seem to be elaborated without
much cross-consultation and coordination, as
pointed out during the UNCTAD team’s meetings
with government officials.
As a consequence, there is not much apparent
synergy, and policies underperform as synergies
across the system of institutions remain
underexploited. For example, it would be useful to
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Science, Technology and Innovation Policy Review - Oman
develop research programmes that will increase
research activities in universities, but they will have
a limited impact on innovation if administrative
regulations and procedures governing research
activities fail to provide incentives to faculty
members to collaborate effectively in research
work.
Also, it should be noted that the Cabinet of
Ministers, the Supreme Council for Planning and
The Council of Oman can and do consult with a
number of representatives of the business sector
and civil society, including the trade unions (which
were recognized in 2006) and the Oman Chamber
of Commerce and Industry (OCCI), when
designing their policies. However, there are
indications that the OCCI has not been fully
accepted as a strategic partner in government
initiatives. More formal policy mechanisms are
required to achieve this. While the OCCI may offer
advice to the Cabinet, the two Councils and other
policy bodies, it needs to be more involved in
policymaking, particularly on technology and
innovation issues.
5.2 The Research Council and its
R&D programmes
Diverse set of programmes
Most of the R&D programmes are developed by
TRC in the context of the National Research
Strategy. Implementation of this strategy began in
2009, following intense consultations for several
years. In essence, it consists of a series of 14
programmes (table 2), of very diverse nature and
size. A major priority for TRC was to set the
programmes in motion and energize the creation of
a research culture corresponding to Oman’s needs.
For TRC it was important to develop a series of
research activities based on international best
practices while responding to specific local needs.
The programmes were designed to take advantage
of and develop synergies among various research
entities. The Oman Vision 2020 and strategic plans
and interests of various economic sectors were
taken into consideration in the selection of the
programmes. These programmes, led and
monitored by TRC, aim to kick-start the
development of Oman as an important regional
hub for research.
Potentially significant impacts of the
R&D programmes
Several observations can be made about the
programmes:
x The programmes aim at fostering the
application of technology research to serve the
economic, social and environmental needs of
Oman.
x Most of the programmes are administered by
TRC, though a few also involve other partners
through participation in the programmes’
steering committees.
x In total, these programmes involve a significant
number of researchers (several hundred, if
undergraduate students and other beneficiaries
of scholarships are included) as a proportion of
the total number of researchers working in the
country.
x Significant resources have been allocated to
individual research projects and chairs – up to
OMR 250,000 per project.
x Several programmes have a pedagogical and
educational purpose, and there is also a plan to
build a large science information infrastructure,
such as a virtual science library.
x The Animal and Plant Genetic Resources
Centre receives substantial support, with more
than OMR 80 million allocated over a period of
12 years, in stark contrast to most other
programmes which are very modestly funded
by comparison. The project was set up in
response to the desire to derive the maximum
possible benefits from Oman’s biodiversity,
while positioning it as a centre of excellence in
biodiversity research and preservation. The
centre was created following a direct instruction
by His Majesty Sultan Qaboos (see box 4).
x Programme implementation appears to have
been rather slow: a minimum of two years
between the conceptualization of a programme
and the first call for proposals for many
programmes. This can be due to a lack of
capacity within the agency, or a search for
consensus, or a high level of prudence in the
selection process.
x Some programmes are already sufficiently
advanced to require evaluation both in terms of
outputs (scientific achievements) and outcomes
(potential technology, economic or social
impacts).
Apparently, none of the programmes include
mechanisms to involve the business sector in their
design phase in order to maximize innovation
performance and impact. This feature may be
explained by the reluctance of the Government to
directly support the business sector’s R&D.
However, such hesitation may result in losing the
economic relevance of the programmes as well as
the opportunity for application of their results. To
some extent this is compensated for by the
academic Innovation Programme, which is working
towards commercializing 15 research outcomes
within the next two years. Universities are free to
pursue the commercialization of their research
output by linking with the Innovation Hub.
Chapter 5: Key interactions II: Government policies and programs
19
Table 2: Research and Development Programmes of TRC
Programme,
starting year and budget
Open Research Grants Program
2009, 3 million OMR per year
Purpose and instruments
Competitive Research Grants awarded to researcher(s) affiliated to
local institutions based on individual or group submitted proposals.
Six local grant committees and national/international peer-reviewers.
Strategic/Directed Research Program :
Road Safety Research
2009, 2.5 million OMR (5 years)
Strategic/Directed Research Program:
Dubas Bug Research
2010, 2.5 million OMR (5 years)
Strategic/Directed Program: Social
Observatory Research
2012, 5 million OMR (5 years)
Strategic Research Program: Renewable
Energy
2013, Budget TBD
Research Chairs Program:
Nanotechnology Chair at SQU
2011, 3.07 million OMR (5 years)
Faculty Mentored Undergraduate
Research Award Program
2013, 200,000 OMR per year (5 years)
(FURAP) Oman Eco-House Design
Competition Program
2012, 750,000 OMR (2 years)
The Virtual Science Library (VSL)
2012, 13 million OMR (5 years)
Electronic Research Information System
2012 (planning), no budget
Education Innovation Assistance Program
2011, 700,000 OMR (3 years)
Research Outputs Incentive Program
2012, 200,000 OMR per year
Animal and Plant Genetic Resource
Centre
2012, 83 million OMR for 12 years
Institute of Advanced Technologies
Integration (IATI)
Start and budget to be determined
Status of program
development
More than 17 academic and research
institutions benefiting from the program.
More than 180 proposals submitted to the
program since launched by the end of 2009.
More than 90 proposals were approved for
funding with budget exceeding 9 M RO.
More than 39 PhD’s and 79 MSc scholarships
were included in the approved proposals.
Competitive Research Grants thematically designed to tackle specific
issues related to road accidents in Oman.
More than 40 proposals submitted, 8 full
proposals retained for screening, 3 finally
selected and contracts signed at end 2012.
UK-TRL awarded for developing data base
(with GPS/GIS).
Competitive Research Grants thematically designed to tackle specific
issues related to the Dubas bug which attack dates trees in Oman.
26 pre proposals, 14 selected for screening, 4
finally retained. TOR for an international and
local research database. One company
selected for developing the database, to be
operational at the end of 2013.
Competitive Research Grants thematically designed to tackle specific
issues related to social issues in Oman specifically related to youth,
income/employments and family stability.
TRC board has approved, road map and
national task force on data bases established;
director recruitment in process.
Competitive Research Grants thematically designed to promote
renewable energy utilization in the Sultanate.
Board approval, steering committee formed
under chairmanship of Public authority for
water and electricity; road map being
developed
Research Chair Grant awarded to SQU for the development of a
centre of excellence in the area of Water Desalination Using
Nanotechnology.
Chaired hired, students recruited, lab space
equipped, first report submitted by SQU and
judged satisfactory.
Competitive small Research/innovation Grants (max 2,400 OMR per
project) awarded to undergraduate students at local academic
institutions under the leadership of an academic mentor.
First calls launched and proposals expected in
June 2013.
The Eco friendly House Competition is an award-winning program
that challenges collegiate teams to design, build, and operate Eco
friendly houses that are also cost-effective and attractive. The winner
of the competition is the team that best blends consumer appeal and
design excellence, with optimal energy production and maximum
efficiency.
Five teams entered competition, design
phase completed, building permits accorded,
two workshops conducted.
The Virtual Science Library (VSL) is a modular Digital Library Portal
that provides the science community with comprehensive access to
modern international research tools customized for national needs.
Negotiation with publishers is going on.
Setting up trials for the SSP for the search
engine.
Improvements in TRESS, FundPlus, Researchers Directory, Science and
Technology Indicators, Reviewers database and including various
funding programs into the electronic submission system such as
FURAP and Strategic/Directed Research programs.
Significant improvements in FundPlus to
handle
Submission of Progress and Final Reports.
Implementation of FURAP Program.
Completion of the STI Report/survey.
The Educational Innovation Support Programs have been set to
develop innovative education in the public education sector and to
enhance the research skills of students within the national innovation
system.
8 teachers trained, and incubating facilities
established in 8 schools.
Rewarding researchers of Open Research Grant (ORG) on the basis of
their research output came as a means to promote their research
excellence and build a research capacity in order to support the
economic and social growth in the Sultanate of Oman.
Guidelines and process procedures approved.
Posted on line. Workshops and visits held in
concerned research and higher education
structures.
Establishment of a research centre for animal and plant genetic
resources that will help in coordinating national efforts in preserving
national wealth from local Genetic resources and to help in adding
value from such resources via research and innovation.
Board approval at least for next three years,
Director has been hired as well as three
supporting staff; Plans for first years actions
are being acted (see below).
Establishment of the Institute of Advanced Technology Integration
(IATI) as the first research institute under TRC auspices. IATI to be
established in collaboration with an international technical strategic
partner.
Planning phase.
TOR developed by German Helmolz
Association has proposed support in
involving three research centres and pilot
projects
Source: TRC, Presentation by the Head of the Research Department, June 2013.
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Science, Technology and Innovation Policy Review - Oman
Box 4: The Animal and Plant Genetic Resource Centre of Oman
The Animal and Plant Genetic Resource Centre (APGRC) project was established by Royal Decree with the aim to look into
developing a genetic centre for animal and plant species native to Oman. Its objective is to collect and study diverse plants and
animal species as important national resources. The preservation of plant and animal genetics for future generations is a key
element. The APGR Centre is based on three pillars: policy, education and value – the last focusing on research that can extract
value. The Center has four committees to guide research priorities, species selection, facilities, and human resource needs. It reports
to TRC.
Oman is home to some 47 species of terrestrial mammal, 19 species of marine mammals, over 1,000 fish species, 1,208 species of
plants, around 10 livestock species, 128 breeding species of birds, over 130 coral species and 5 turtle species. Currently, in Oman,
there is a modest seed bank and most seeds are sent abroad for conservation.
A number of initiatives are planned, including a regular Science Café event, as well as mobile exhibitions to educate and capture
traditional knowledge. There is a general lack of capacity at universities training for research in genetic conservation. As in most
sectors, research capacity is diluted due to teaching obligations, administrative problems and the small size of projects. The success
of the project will depend to an important extent on the quality of the cooperation between the APGRC and related institutions such as
The Ministry of Agriculture and Fisheries and SQU.
Source: Based on an interview with the Program Director, Nadiya Saady (May, 2013).
5.3 Support to innovation projects
A national innovation strategy is in the making at
TRC to complement the National Research
Strategy. It is expected to be based on several
policy pillars that will take into account Oman’s
innovation potential and ambitions. Significant
efforts have been made to provide practical
support for innovation with the establishment of the
Industrial Innovation Centre located in the
Knowledge Oasis of the Muscat industrial estate.
Limited government support
The Industrial Innovation Centre and the projects
on which it is working have a relatively low budget
allocation of only OMR 1.5 million in total, which
creates major problems in setting up a national
innovation system. However, this is not surprising
considering the design of the R&D programmes,
only a few of which are aimed at supporting the
business sector’s innovation needs or efforts.
There seems to be some reluctance or a lack of
consensus among Oman’s STI policymakers, not
least at TRC, to directly support innovation efforts
of private firms. This may be due to their literal
interpretation of the principles of the free market.
While academics are free to take ideological
positions, most – if not all – policymakers
worldwide have tended to adopt a pragmatic and
nuanced approach to stimulating innovation, and to
supporting the risks and uncertainties of innovators
and technology firms, which can lead to valuable
economic and social benefits of national
importance. Without necessarily advocating
strongly interventionist policies in favour of national
industrial champions, well-managed financial
support to the business sector to stimulate its R&D
and innovation efforts, based on clearly identified
needs and competencies, has proved to be a
useful investment benefiting the entire economies
of most developed and emerging countries.
More broadly, the modest budget for R&D and
innovation support will not allow much progress in
innovation, in terms of either piecemeal
innovations or the development of a national
innovation system, when compared with what is
spent on infrastructure. For example, Oman’s
express highway costs approximately OMR 3
million per kilometre, compared with approximately
OMR 20 million per year spent on TRC’s R&D and
innovation programmes. The national priority of
diversification through innovation requires a larger
financial commitment in order to tap the innovative
potential of Oman’s private sector and industries.
Nevertheless, a number of initiatives have been
launched recently, as discussed below.
The Innovation Hub Project
The Innovation Hub (I-Hub) is a pilot project
designed to spearhead the culture of innovation
and
entrepreneurship
and
unleash
new
possibilities for economic diversification, wealth
and job creation. The I-Hub serves as an
innovation platform to support local innovators to
transform their ideas into businesses through
funding, mentoring, linking and knowledge
networking,
and
by
facilitating
the
commercialization process. This is expected to be
achieved through four well-integrated innovation
assistance programmes to stimulate innovation at
four levels: industrial, educational, academic, and
individual and community. In addition, LINKING
Oman and commercialization programmes have
been developed and deployed to support and
facilitate innovation by providing support for in
networking, clustering and match-making. To
further support innovation, databases and
information services on such matters as
prototyping, IPR, funding and incubating agencies,
have been developed, along with rosters of
scientists and researchers in diverse fields and
sectors of innovation. The objective is to support
the commercialization of promising innovations.
Chapter 5: Key interactions II: Government policies and programs
The National Innovation Centre
Following a decision taken at the Bahla SMEs
symposium held in January 2013, the Research
Council was requested to develop a roadmap
leading to the establishment of a National
Innovation Centre. Accordingly, a road map was
designed and submitted to the Supreme Council of
Planning at end of December 2013 for approval. It
envisages the creation of a national centre that
would support innovation in the public, private and
academic sectors. The overall concept of the
centre is illustrated in chart 6.
The Industrial Innovation Centre
The Industrial Innovation Centre (IIC) was created
in 2011, jointly by TRC and the Public
Establishment for Industrial Estates, with a budget
of OMR 1.5 million. It was conceived as a projectincubating unit open to both Omanis and foreign
firms. It funds 50 to 75 per cent of the cost of a
project. While some matching funding is expected,
SMEs can use the available funding however they
like, for example to hire researchers and
consultants, develop technology/processes, and
cover travelling expenses and overall R&Dassociated expenses.
So far the IIC has been engaged in 29 projects of
which 10 have made significant progress in the
form of prototype completion and/or market testing.
Some projects that deserve mention include: a
water/oil separation technology, a new packaging
method for abalones (a high-quality Omani product
in great demand by markets abroad) and a new
way of producing halwa – the traditional Omani
sweet made of starch, ghee, sugar and flavourings
– with a new low-cholesterol formula. Unfortunately,
the commercialization of the latter product has
been discouraged by the Royal Court (Diwan),
which believes the recipe alters the traditional
Omani method, taste and brand.
The Innovation Centre is staffed by several
consultants (Omanis and foreign) who have
access to an international network of experts to
search for appropriate knowledge, technology and
potential markets abroad. There is a plan to
transform the Centre as an autonomous company
in which TRC would be a partner along with
other bodies.
Innovation Fair
Innovation Fair Oman (INFOM) has been
established to provide and disseminate information
on state-of-the-art innovations in Oman. It gathers
innovators and motivates them to broaden their
outlook and further develop and share ideas and
experiences.
Two INFOM events have been held, in 2011 and
2012 respectively. In 2011, INFOM invited
submissions of applications resulting in 81
applications, of which 44 prototypes were chosen
to showcase at INFOM. Each prototype was
registered with the local Department for Patents,
and participants were invited to attend workshops
on innovation, finance and marketing.
Chart 6: A holistic perspective of the National Innovation Centre
Source: The Research Council.
21
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Science, Technology and Innovation Policy Review - Oman
Venture capital
The lack of venture capital is an issue hindering
innovation. TRC has approved the establishment
of a venture capital company in cooperation with
the investment firms of Oman Oil and Oman Tel to
commercialize successful innovations supported
by the innovation hub and its projects, as well as to
target innovation with an investment of OMR 50
million. The venture capital company will target
firms with locally generated R&D as well as those
that have the capacity to identify, import and
transfer innovative technologies.
5.4 Framework conditions: Initiatives
Work in progress
The Government has perceived the need to act in
a few areas that present important challenges or
opportunities for improving the innovation climate.
In some areas, work already began several years
ago and is bearing fruits, such as the Information
Technology Authority (ITA) to boost the digital
economy and society in Oman, and particularly egovernment. Recently, SME issues have received
considerable attention with the organization of a
major symposium, followed by a number of actions.
A new research-oriented university is also being
planned. In addition, a large new Innovation Park
is being built in Muscat, along with a Science City
and Medical City, to advance the level of higher
education, research excellence and innovation.
Digital economy and society
The Information Technology Authority (ITA),
created in 2006, elaborated and put in place a
national digital strategy in 2008. Its objective is to
improve the efficiency of government services, and
support businesses and citizens in the use of ICTs.
An Electronic Transactions Law was enacted in
May 2007 to establish the protection of online
privacy and validate digital signatures, in
addition to the introduction of electronic
messaging regulations.
Another cross-cutting initiative, the ITA’s SAS
Programme for Entrepreneurship targets SME ICT
businesses, students and job-seekers interested in
starting a business. It also aims to develop a
competitive ICT sector by seeking to increase both
foreign and local investment, while encouraging
and supporting innovation.42 In the education field,
various ideas and plans have been elaborated in
the concerned ministries and are expected to be
implemented in the near future.
A national e-Payment gateway project has also
been launched to enable electronic payments for
e-Government services. An e-tendering service
has been put in place in five ministries as a first
step. An official e-Government service portal is
operational, which provides facilities for the
creation of identity cards and visas, and even for
divorce procedures. A national IT training and
awareness programme has been launched,
apparently to the great satisfaction of those who
have attended it.43 This e-Government programme
benefits from a sizeable budget allocation of OMR
250 million.
Support to SMEs
Regarding SMEs, the Ministry of Industry and
Commerce organized a major symposium in
February 2013, in accordance with instructions
from His Majesty Sultan Qaboos. A large number
of businessmen and entrepreneurs participated,
and it was widely promoted by the media. Its aim
was to generate ideas for reforms and policy
improvements. It led to 20 recommendations,
including the simplification of administrative
procedures and increased financial support to
SMEs, as well as the development of the National
Innovation Centre (described above), which is
being spearheaded by TRC.
The Al Rafd fund, capitalized at OMR 70 million,
has been established to finance SMEs with a 2 per
cent service charge and no collateral requirements.
A budget of up to OMR 100,000 can be allocated
to each SME on the condition that the requesting
entrepreneurs are unemployed and would like to
become self-employed. In addition, the Oman
Development Bank (ODB), which also funds SMEs
but is generally oriented to financing corporations
without funding limits (i.e. even if the requested
budget exceeds OMR 1 million), has announced
that it will provide technical support to SMEs to
help them upgrade and develop transparency and
management capabilities, and improve accounting
skills. 44 Following recommendations, the Central
Bank of Oman is obliged to dedicate 5 per cent of
its commercial loans to SMEs and reserve 10 per
cent of tendering for public procurements from
SMEs. Additional measures are envisaged, but
not yet approved, including a training programme
for promoting entrepreneurship among interested
government employees, as well as a regulation
that requires government employees desiring to
manage their own businesses to work in those
businesses full time, though they will receive their
salaries from the Government for one year after
resigning their posts to become entrepreneurs. 45
Thus, funding is available, along with opportunities
for business creation. Meanwhile, coaching
initiatives for entrepreneurship have started from
modest beginnings, but are increasingly available
through several programmes that have been
established, for example in cooperation with Ernst
and Young and KPMG. Universities and higher
education colleges as well as other institutions,
such as Enjaz Oman, the National Business
Centre (NBC), the Public Authority for SME
Chapter 5: Key interactions II: Government policies and programs
Development (PASMED) and ITA, are also
teaching entrepreneurship and providing training.
The Sharaka programme for developing youth
entrepreneurship is active, but capacity is weak
and ideas are lacking. Based on the belief that
international cooperation could have a positive
effect, the Knowledge Oasis Muscat (KOM) has a
coaching programme which is actively linking up
with similar activities in the EU. Offset funding for
project management and training is available, but
the Oman Development Bank and 16 other funding
agencies face the problem of a lack of identifiable
innovation opportunities. Many project proposals
have questionable innovation content.
Education
The Government, with the Ministry of Higher
Education as the lead agency, is working on
developing an S&T University that would be
entirely dedicated to research. It is expected to
have a high international status, to be actively
associated with global research networks, and to
concentrate on a limited number of programmes
and topics closely linked to Oman’s needs and
strengths. The university would be located in the
new, purpose-built innovation park, adjacent to
S&T city, which is hoping to attract five or six
foreign universities (see below).
In the field of vocational education, the Deputy
Minister for Manpower in charge of Technical and
Vocational Education and Training (TVET) has
developed plans aimed at sensitizing students of
the seven colleges supervised by that Ministry to
the opportunities and realities of business and
commerce. The Ministry has plans to establish
centres for entrepreneurship and innovation in
each technical college. The overall objectives in
the long term are as follows:
x To give students an early exposure to
entrepreneurship in schools in order to unlock
their ambitions and initiatives;
x To improve
work; and
mobility
between
study
and
x To raise awareness of entrepreneurship and
innovation issues (with ongoing cooperation
with UNCTAD Empretec).
If well implemented, such measures, involving
some 40,000 students, could have a significant
impact in terms of changing the mindsets of the
students and improving their qualifications.
A new Innovation Park
Work on Innovation Park Muscat has been under
way since 2013. The park will be located beyond
SQU and KOM and close to GU Tech. A business
plan and a marketing plan have already been
developed, while several prospective sectors have
been identified including oil/gas and water. The
23
Innovation Park Muscat covering an area of
4,000m2 will house TRC, business incubation
facilities and SME facilities, and phase 1 is
scheduled to be operational in 2015. It will include
a fabrication workshop for prototyping and a social
centre
to
encourage
interactions
among
technologists and entrepreneurs, and will also
provide space for multinational corporations to
establish a regional and national presence. The
Institute of Advanced Technology Integration, the
Health Research Institute, a mosque and a hotel
will be opened in phase 2. The Food and
Biotechnology
Institute,
the
Centre
for
Environmental Innovation and Research, a park
administration, a recreation centre and a school
are planned for phase 3.46 There are also plans to
install at least three large international tenants.
Finally, a separate company is to be incorporated
to manage the Innovation Park. International
companies have been
surveyed in an
“engagement session” to gauge their interest,
though there is no local SME involvement
at present.
The idea behind Innovation Park Muscat is to
provide an opportunity to link academic research
and academics with entrepreneurs. Indeed,
academics have been demanding facilities to
conduct applied research. Plans for the Park to
provide “free-zone” types of incentives, including
fiscal/tax incentives, are not yet approved.
The Oman Innovation Park, which will host the
headquarters of TRC, retains a strong emphasis
on R&D. The university part will be occupied by the
planned new University of Oman back to back with
a Science City and Medical City, which would be
located at the end of the Barka region. These
institutions, together with the recently opened
Oman-German University, represent a highly
ambitious effort to create a viable knowledge
platform for the knowledge industries of the future.
5.5 Agricultural research laboratories and
technology services
Outside the oil and gas sector, research and
technology infrastructure has been developed
principally in the agriculture and fisheries sector.
Agriculture accounts for only 1.2 per cent of the
GDP and employs 5.2 per cent of the economically
active population, mainly at the smallholder and
subsistence level. Oman is a net food importer,
importing $2.5 billion worth of food per year while
exporting only about $1 billion worth. The total land
under cultivation is estimated to be only 6 per cent
of the total land area, but agriculture plays a crucial
role
in
maintaining
regionally
balanced
development within the country.
Agriculture and fisheries, while growing in absolute
terms and in productivity, have been steadily
declining in relative importance for the economy
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Science, Technology and Innovation Policy Review - Oman
since the start of oil exploitation in the late 1960s.
Land use is determined primarily by the availability
of water. There is extensive cultivation in coastal
areas (Al Batinah and Al Sharqiya), while in the
interior, agriculture is dependent on wadis and on
the fallaj water canals for irrigation owing to
insufficient rainfall. The coastal regions are
suffering from a drop in the water table and
increasing salinity.
The principal agricultural product is the date, with
almost 300,000 metric tons produced in 2010.
Other products include bananas, mangoes,
coconuts, lime, alfalfa, tomatoes, cabbages,
eggplants, okra and cucumbers. Frankincense is
traditionally produced from trees growing wild in
Dhofar. Along the Al Batinah coast (in the northeast), wheat, and Rhodes grass are grown in
addition to fruit. Sorghum and alfalfa are primarily
animal feed plants.
The Ministry of Agriculture and Fisheries has
developed a comprehensive research strategy that
focuses on challenges arising from abiotic and
biotic factors, including climate change which has
been affecting local ecosystems and their flora and
fauna through the associated effects of natural
disasters such as cyclones, flooding, droughts,
ocean acidification and human activity. The future
food security of Oman will be closely linked to the
development and progress of the agricultural and
fisheries sector.
Constrained research structures
The Directorate General of Agriculture Research,
established under the Ministry of Agriculture and
Fisheries, has 126 Omani researchers and
supervises six entities: the Plant Production
Research Centre, the Plant Protection Research
Centre, the Soil Research Centre, the Date Palm
Research Centre, the Livestock Production
Research Centre, and the Veterinary Health
Research Centre. It has a budget of OMR 12
million, mostly to cover salaries.
Research stations or farms focus on identification
and diagnosis of production problems in various
agro-ecological zones and adapt technologies for
increased production at the farm level, including,
specifically, the improvement of arid land. Some
research is carried out collaboratively with
international
and
regional
organizations,
universities and non-governmental organizations
(NGOs).
Donors and technical agencies, such as the Food
and Agriculture Organization of the United Nations
(FAO),
the
United
Nations
Development
Programme (UNDP), and the World Bank, have
funded
R&D
programmes
targeting
the
improvement of pasture resources, which is a key
concern. There is also collaboration with the
International Centre for Agricultural Research in
the Dry Areas (based in the Syrian Arab Republic).
General problems relate to salaries for researchers
at the Ministry of Agriculture and Fisheries, which
are not competitive, are tied to budgets and lack
an incentive element. The research budget can
only be spent on technical operations with only a
small
amount
dedicated
to
short-term
consultancies, but it has no provision for incentives.
Doctoral candidates tend to leave immediately
after completing their degrees, as salaries at the
Ministry’s research centres are low compared with
those offered in the academic or business sectors.
Insufficient human resources for
extension services
A relatively well-developed network of extension
services provides various types of services to local
agricultural communities. It offers assistance
through subsidies for greenhouses, irrigation,
machinery, pest and disease control, and in
particular for date palms, with a budget allocation
of OMR 30 million. While funding does not seem to
be a big problem, human resources in the category
of “skilled extensionists” are missing. Animal health
is another important programme activity with a
budget of OMR 5.6 million, with one part of these
funds set aside for improving veterinary clinics.
Mobile veterinary clinics are being planned and set
up. Unfortunately, staff in extension services work
without formal linkages to staff in research.
5.6 Overall assessment: An embryonic policy
that needs to be strengthened
and expanded
The following is an appraisal of government action
in the field of STI.
The policy to improve the innovation climate and
system in Oman is still at an embryonic stage. The
most explicit part is the national R&D strategy,
while the Innovation Strategy is yet to be instated.
The overall STI policy remains fragmented and
uncoordinated among government entities, as well
as with the business sector. A general awareness
of innovation issues is lacking among citizens. The
development of a national innovation system is not
yet integrated within national strategic planning
and operational decision-making.
As a whole, overall funding support to research
and innovation remains quite small when
compared with funding by the government for other
items, such as the road infrastructure.
Implementation of policy measures seems
relatively slow, possibly due to a series of factors
such as a lack of capacity in concerned
government bodies, a cautious approach in
selecting projects or delivering funds, cumbersome
bureaucratic procedures, and the political and
social culture of consensus-building.
Chapter 5: Key interactions II: Government policies and programs
25
The R&D strategy is modest, cautious and gradual
in its approach, but this seems to be justified in
view of the relative weakness and modest size of
the Omani research base and a lack of obvious
recipients of R&D outcomes among entrepreneurs
or particular sectors.
interventionist. It may also be due to the
inexperience of the policymaking community with
certain types of innovation support measures that
are in place in other countries, notably those that
aim at stimulating university-business cooperation
in R&D.
Nevertheless, the R&D strategy is involving a
steadily increasing number of researchers, while
aiming at connecting their efforts and activities with
perceived
needs.
Unfortunately,
there
is
insufficient involvement of the business sector in
co-funding or in partnering R&D work. Increasing
the impact of R&D and innovation on commercial
outcomes requires reducing fragmentation in
innovation policy and action, as well as revisiting
and assessing incentive structures.
There is no solid public research and technology
infrastructure, except in the agriculture and
fisheries sector, which suffers from the problem of
retaining its human resources, and in the oil sector,
which remains isolated from the rest of the
economy. This is a serious issue as the oil sector
is dominated by an Omani public company in a
joint venture with a foreign partner and it should
recognize the need for initiatives to increase its
interaction with the rest of the economy.
For example, on several occasions the UNCTAD
team heard that researchers who receive funding
cannot pay themselves compensation, even when
their own institutions/universities generally do not
offer compensation for R&D activities. Moving
forward would require strategic actions, such as
joint programmes, involving public and academic
institutions, on capacity-building and research, and
a greater emphasis on collaborative research
where the private sector would play an important
and critical role.
As far as the framework conditions are concerned,
the issue of small firms in the innovation system
and their potentially important role to complement
or supplement big businesses is only just
beginning to be addressed following the SME
Symposium held in February 2013. On the
education front, the Government has been
considering measures concerning vocational
schools, but they need yet to be implemented.
More generally, R&D and innovation efforts in the
business sector receive little support and few
incentives. This situation may be due to a lack of
consensus within the Government about such
support, with a debate between those who favour a
clear but misguided adhesion to a purely free
market approach and those who prefer to be more
Measures for building a digital economy and
society are beginning to bear fruit, notably those
related to e-government procedures (e.g. online
services,
citizens’
participation,
legislative
information, and training and awareness sessions).
However, the development and spreading of a
digital society are hampered by costly Internet
tariffs and a poor broadband infrastructure.
26
Science, Technology and Innovation Policy Review - Oman
Chapter 6: Human resources, labour and employment
27
Part II: Strategic innovation pillars
6. Human resources, labour
and employment
6.1 Introduction
Oman may be characterized as having
simultaneously a labour shortage and a labour
surplus economy. Shortages arise because private
sector employment opportunities are growing
faster than Omani skills and capabilities, while a
surplus arises due to many Omani nationals’
reluctance to accept employment in the private
sector. Indeed, private sector employment is often
seen as a temporary measure, while job-seekers
wait for openings in the public sector. Omani
university graduates seem to believe that public
sector employment is readily available, and that it
is a very desirable career path. What is more,
there is a general expectation that the Government
will continue to provide employment opportunities
for its nationals. Recent increases in public sector
jobs in response to concerns about social unrest,
particularly among the youth, have reinforced such
expectations.
Education
In common with other GCC countries, educational
attainment in Oman is at the lower end of the
international spectrum, and it is significantly lower
among boys than among girls. The current
response of lowering university admission
standards for boys needs to be reconsidered as
this weakens incentives for attaining high
standards. In interviews during the UNCTAD
mission in May 2013, many respondents observed
that experienced non-Omani teachers were being
replaced by freshly graduated Omanis as a part of
the Omanization policy, even if they were
somewhat lacking in competencies and abilities. A
generalized fall in the quality of teaching will
necessarily cause deterioration in educational
attainment and reduce prospects for Omani
nationals to compete for positions, both in the
public and private sectors, which require
university degrees or advanced levels of
technical competence.
A closely related problem is the misalignment in
the provision of higher education and the actual
needs of the labour market. The distribution of
degree courses between engineering and
occupational disciplines on one side, and the
humanities on the other, is similar to that found in
many countries around the world. However,
employment prospects for humanities graduates
are much less favourable in Oman. The private
sector, with its few large and capital-intensive
enterprises and large contractors, has limited need
for administrative and managerial staff. SMEs also
have little need for humanities graduates and, as a
result, such graduates often remain unemployed
until they find a job in the public sector, even
though government agencies are fully staffed most
of the time. The only practical solution is to reduce
the number of humanities graduates.
Omanization
The policy goal of Omanization has been
established with the medium- to long-term
objective of reducing the share of non-Omani
labour in the country’s overall employment.
However, while such a policy goal is a worthy
consideration, from an innovation perspective it
cannot be a primary objective. It is more important
to raise productivity and undertake the investment
and reforms needed in educational and industrial
policy that will enable Omanization as an outcome
of a broader process. In this way, Omanization will
promote meritocratic management in institutions
and firms, and contribute to developing incentives
that have positive effects on productivity and
innovation.
In the short run, to reduce the contribution of nonOmani workers to labour supply, it may be
necessary to establish overall quotas by skill level,
and a national system for allocating permits
perhaps through an auction system. This would
undoubtedly increase production costs which may
be passed on to consumers, and thus such
policies may find opposition. Firms would have to
adapt to higher cost labour while seeking to offset
wage increases by investing in increasingly capitalintensive production. This would, at the same time,
be an important incentive for innovation. The
success of such a strategy would depend on the
implementation of policies to develop an adequate
supply of Omani workers and managers with
stronger technical qualifications and skills than
exist at present.
The Omanization policy of promoting the
employment of Omani nationals in the private
sector has seen some success, but further
measures to reduce unemployment among
nationals are required. The overwhelming
preference for employment in the public sector is
the main factor undermining progress in the
Omanization policy. An important policy outcome
will be to equalize the attractiveness of public and
private sector jobs for Omani job-seekers. This will
require a combination of reducing the perceived
advantages of public sector employment and an
improvement in salaries and benefits in the private
sector. By gradually providing incentives to the
private sector to switch to the use of capitalintensive technologies, the resulting rise in
productivity may enable the disbursement of higher
28
Science, Technology and Innovation Policy Review - Oman
wages. Regulating minimum wages and improved
working conditions could establish a baseline for
decent work and equitable social and economic
opportunities. However, its application to only
Omani nationals could produce a variety of
adaptive reactions from private sector firms,
thereby reducing its effectiveness.
Innovation and economic diversification
Employment generation is closely linked to
economic diversification, which in turn is intimately
linked with the development of innovation
capabilities. Employment creation can be spurred
by investment in tourism, agriculture, construction
materials, and shipping and ports linked to
industrial zones. Some of these are energyintensive industries and may serve employment
and diversification objectives by creating demand
for downstream activities (e.g. food processing,
packaging, and water and waste management).
In order for revenues from diversification to
successfully replace oil revenues, including
revenues used to finance public sector spending,
the absolute size of future diversified sectors will
need to be much greater than the size of the
current oil sector, as their profit margins would be
much smaller. Roughly speaking, the cost of
exploiting oil in Oman today is one quarter of its
international market price; this level of margin is
unattainable in globally competitive industries,
such as tourism or shipping, which could offer
significant employment opportunities. Achieving
such diversification is an ambitious objective that
presents Omani policymakers with serious
challenges (see section8 for a broader discussion
of the diversification issue). Among them will be
the need to generate planning, implementation and
evaluation capabilities through human resources
development. Policy experimentation and the
means to generate a stronger entrepreneurship
culture are other challenges.
Evidence-based policies and strategic
perspectives
Evidence-based policymaking is crucial for
developing national human resources. Given the
importance of employment in tackling economic
and social issues, and its linkages to innovation,
labour surveys and labour market information
systems need to complement each other and
contribute to improving the capacity for
macroeconomic analysis.
Structured and accessible data also enable
projections based on comparing different scenarios
and assessing the probabilities of different
outcomes. The assumption of best-case scenarios,
wherein oil prices stay high and oil reserves get reevaluated upwards indefinitely, can raise questions
about the utility of Omanization, labour and human
capacity-development policies. Assumptions of
worst-case scenarios, wherein oil depletion or a fall
in oil prices is not followed by adequate policies for
innovation, suggest a dual contraction of both
public and private sector jobs and wages to an
extent that public sector employment no longer
presents any advantages over the private sector,
and non-Omani workers leave the country as
earning
opportunities
in
Oman
become
unattractive. The need for the development of
human capabilities increases in this extreme
scenario as a significant proportion of the
population becomes poor, moves into the informal
economy and engages in low-tech and traditional
economic activities, such as subsistence farming.
A far more positive scenario would see the
emergence of higher productivity employment
opportunities for Omani nationals in a more
diversified economy, with sustainable, high living
standards in the context of a declining contribution
of the energy sector to GDP, providing alternative
fiscal income for a viable public sector and
avoiding the social disruptions, and eventual
political tensions associated with a swift, radical
change in the composition of the labour market.
Policy priorities
Given the above considerations, this section
focuses on clarifying the rationale for the following
policy priorities aimed at meeting head-on some of
the challenges that lie ahead for Oman over the
next 20 years.
1) Manage the number of employees in the
public sector with a view to achieving the goal
of providing a high quality and efficient public
service.
2) Make salaries, benefits, pension entitlements
and age of retirement in the public sector
comparable to those in the private sector.
3) Rebalance the proportions of Omani and nonOmani workers to total employment by
bringing more Omanis into productive
employment.
4) Align enrolments in the universities with
employment prospects.
5) Train and educate teachers to a higher
standard at all levels of education.
6) Address the problem of under-achievement of
boys in primary and secondary schools, and
target gender-balanced outcomes in higher
education.
7) Develop capacity for the analysis of economic
data and for the development of scenarios of
interaction between the productive sectors
and national human resources development.
Chapter 6: Human resources, labour and employment
29
Table 3: Omani population by age and gender, 2013*
Age
Male
Female
Total
Per cent
0-4
158,205
152,619
310,824
14.3
5-14
221,454
212,904
434,358
20.0
15-24
25-64
232,129
474,808
21.9
48,132
44,376
92,508
4.3
430,144
65+
Total
242,679
1,100,614
429,360
1,071,388
859,504
2,172,002
39.6
100.0
Source: National Centre for Statistics and Information (NCSI), Population Statistics Bulletin.
* Note: Mid-year data.
6.2 Population, education and labour supply
Population
In 2013, the population of Oman was 3,957,040
persons, of whom 2,212,693 were Omani
nationals. Table 3 shows that Oman has a young
population that is a valuable resource, but this also
presents formidable policy challenges. It is
estimated that every year between 40,000 and
50,000 Omani nationals become eligible to enter
the workforce, but the number that actually
succeed in finding jobs varies due to a number of
social and economic factors.
Education
Following reforms implemented in 1998-1999, the
structure of primary and secondary education in
Oman was changed, with ten years of basic
education subdivided into two cycles (grades 1−4
and 5−10) followed by two years of noncompulsory post-basic education. Promotion is
automatic during the first cycle of basic education
(i.e. Grades 1-4), and thereafter it depends on
assessment. While only about 15 per cent of
students drop out before reaching Grade 12, there
is widespread concern that the standard of
educational attainment is low and irregular, and in
particular, that the level of attainment of boys tends
to be significantly lower than that of girls.47 Table 4
provides summary data on enrolments by level of
education and gender, based on data provided by
the National Centre for Statistics and Information
(NSCI) of Oman.
Chart 7 and table 5 describe the findings of the
TIMSS 2011 48 report on international scholastic
aptitudes in maths and sciences in primary and
secondary education. The best performing
countries in sciences, for both genders, are those
in East Asia. These countries have a tradition of
placing a very high value on education, and have
succeeded in achieving impressive economic
development, despite their lack of natural
resources. In 2011, an estimated 46,000 students
were enrolled in Grade 12, evenly split between
males and females − a liberal estimate of the
number of youth seeking to enrol in higher
education, technical education and training centres
in the following year. The actual number will have
been somewhat lower as some pupils will not have
passed their General Certificate examination, while
others will have chosen not to pursue further
education after Grade 12. Success rates among
females tend to be notably higher: in 2009, 95 per
cent of females and 81 per cent of males earned
their General Certificate.49
Table 6, which shows the intake into higher
education, diploma courses and bachelor’s degree
courses, for 2011-2012, indicates that about half of
Omani secondary school graduates enrol in higher
education.
Table 4: Enrolments by level of education and gender, 2012−2013 (thousands)
Male
Basic education
Old system (Grades 1-9)
218
33
Female
Total
209
427
31
63
Upper secondary
39
48
88
Private
43
36
79
359
348
707
Community schools
Total
26
Source: NCSI, Statistical Year Book, 2013: 436, 449, 454 and 473;
NCSI, General Education Statistics Bulletin, 3, 2013:12.
24
50
30
Science, Technology and Innovation Policy Review - Oman
Chart 7: Difference in average science scores of eighth grade students
in selected countries, by gender, 2011
Source: National Centre for Education Statistics, United States Department of Education Highlights from TIMSS 2011,
Mathematics and Science Achievement of U.S. Fourth- and Eighth-Grade Students in an International Context.
Public higher education is provided by the
autonomous Sultan Qaboos University, six
Colleges of Applied Sciences administered by the
Ministry of Higher Education, the Higher College of
Technology in Muscat and six regional colleges of
technology administered by the Ministry of
Manpower, several institutes administered by the
Ministry of Health, the College of Banking and
Financial Studies administered by the Central
Bank of Oman, and a number of specialized
professional or technical colleges and institutes. All
admissions to public institutions of higher
education are handled by the Higher Education
Admissions Centre.
Typically, studies at the Sultan Qaboos University
begin with a foundation year devoted to English,
mathematics, information technology and study
skills, while the actual degree courses are threeyear programmes held at one of the nine colleges
or faculties. The annual intake in 2011-2012 was
3,130 students and total enrolment grew to 15,345
students. Table 7 shows that there is an almost
even intake of students in liberal arts programmes
and science, engineering and vocational studies.
While this proportion is not obviously out of
balance, when compared to the structure and
human capability requirements of Omani industry,
the proportion of students pursuing non-technical
Chapter 6: Human resources, labour and employment
31
Table 5: Average science and mathematics scores of eighth grade students
in selected countries, 2011
Science
Mathematics
Education system
Singapore
Korea, Republic of
Japan
Finland
Slovenia
Russian Federation
United States
Hungary
Australia
Israel
Lithuania
New Zealand
Sweden
Italy
Ukraine
Norway
Kazakhstan
Turkey
Iran, Islamic Republic of
Romania
United Arab Emirates
Chile
Bahrain
Thailand
Jordan
Tunisia
Armenia
Saudi Arabia
Malaysia
Georgia
Oman
Qatar
Lebanon
Indonesia
Morocco
Ghana
Average score
590
560
558
552
543
542
525
522
519
518
514
512
509
501
501
494
490
483
474
465
465
461
452
451
449
439
437
438
428
420
420
419
406
406
378
308
Education system
Average score
Korea, Republic of
613
Singapore
611
Japan
570
Russian Federation
539
Israel
516
Finland
514
United States
509
Hungary
505
Australia
505
Slovenia
505
Lithuania
502
Italy
498
New Zealand
488
Kazakhstan
487
Sweden
484
Ukraine
479
Norway
475
Armenia
467
Romania
458
United Arab Emirates
456
Turkey
452
Lebanon
449
Malaysia
440
Georgia
431
Thailand
427
Tunisia
425
Chile
416
Iran, Islamic Republic of
415
Qatar
410
Bahrain
409
Jordan
405
Saudi Arabia
394
Indonesia
386
Morocco
371
Oman
366
Ghana
331
Source: National Centre for Education Statistics, United States Department of Education, Highlights TIMSS 2011
studies is too high in relation to employment
opportunities, which creates problems for many
graduates.
The colleges of technology offer four-year
programmes. Completion of the second year leads
to the award of a diploma. Students with
sufficiently high grades are allowed to continue to
the third year, the completion of which leads to the
award of a higher diploma, while some are
subsequently permitted to continue for a fourth
year and earn a bachelor's degree. The award of
any qualification requires completion of prescribed
on-the-job training.
As the national demand for higher education
greatly exceeds what is on offer in public
institutions, the Government has supported the
establishment of private schools and universities.
Official support has taken the form of concessions
for land, subsidies for construction, and the
payment of fees of government-sponsored
students. The Ministry of Higher Education is
responsible for accreditation and for monitoring the
quality of education and the degrees awarded.
While accreditation and monitoring can serve to
disqualify schools with unacceptably low
standards, the main constraint on academic
standards is the level and quality of knowledge and
Table 6: Higher education intake, 2011-2012
TOTAL
Male
Female
EXPATRIATE
Total
Male
Female
OMANI
Total
Male
Female
Total
Sultan Qaboos university
1,510
1,620
3,130
11
10
21
1,499
1,610
3,109
Private universities, colleges
4,389
11,057
15,446
295
194
489
4,094
10,863
14,957
6
7
13
Universities and colleges abroad 1,628
Colleges of Applied Sciences
Technical colleges
Health institutes
Institute of Shariah Sciences
Total
1,264
2,892
959
1,117
2,076
3,500
1,635
5,135
135
83
218
25
11
12,287
17,238
29,525
337
222
166
462
Source: NCSI, Statistical Year Book, 2013: 472.
1,628
1,264
2,892
953
1,110
2,063
3,500
1,635
5,135
36
110
72
182
559
11,950
17,016
28,966
628
166
462
628
32
Science, Technology and Innovation Policy Review - Oman
Table 7: Enrolment of Omani students at Sultan Qaboos University, 2011-2012
Specialization
Males
Females
Total
%
Society and culture
551
329
880
5.7
Education
819
1,042
1,861
12.1
Religion and philosophy
Management and commerce
Agriculture, environment, etc.
Information technology
Natural and physical sciences
Engineering and related
Health
Total
814
1,511
2,325
15.2
653
652
1,305
8.5
1,158
1,170
148
180
2,328
15.2
328
2.1
1,034
1,328
2,362
15.4
517
806
1,323
8.6
1,988
645
7,682
7,663
2,633
17.2
15,345
100.0
Source: NCSI, Higher Education Statistics Bulletin, Issue 2, 2013: 28.
competence of secondary school graduates
entering university. Critical thinking, problemsolving ability, and mathematical ability are major
concerns, which limit the academic ambitions and
performance of both students and institutions,
including their capacity to be involved in research
projects, interact with industry and contribute to
innovation processes.
students with the opportunity to prepare for and
take examinations at a university with high and
internationally
recognized
standards.
This
approach does not, however, resolve the
fundamental problem of low standards of
attainment in secondary education.
Private universities are required to be affiliated with
overseas universities, often from developed
countries. However, with a few exceptions, many
of these affiliations are with universities that in their
own environments have modest admission
standards and rank low in unofficial rankings. The
quality of the teaching staff and the rigour of
examinations vary and can be detrimental to the
academic success of students, while being
inextricably linked to admission standards. If
universities and colleges are to maintain the same
teaching and examination standards as they do in
their developed-country campuses, they need to
apply the same admission standards. Given the
shortcomings of secondary school attainment in
Oman, practical compromises are reached and
deter top-level schools from entering into affiliation
agreements. An alternative would be to provide
In Oman, the supply of labour is growing faster
than the population due to high enrolment rates in
secondary education, in particular among females
who, in addition, academically outperform their
male counterparts. Estimating the growth of the
labour supply is an important task for the
authorities responsible for employment policy.
Labour supply
Table 8 shows the trend in labour force
participation. An obvious trend is the growing
number of women in the labour market. For
example, there was a threefold increase in the
participation rate of women in the 20−24-year age
group between 1993 and 2010. This change is
likely to have been due partly to a change in
attitudes and partly to an increase in the availability
of government jobs that attract women; but the
main determinant was almost certainly the change
Table 8: Labour force participation rates by gender and age group
1993 Census
2003 Census
2010 Census
Age group
(years)
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
Male
22.4
84.5
96.3
96.0
95.3
93.1
89.6
81.4
75.4
52.5
Female
3.1
16.5
11.9
7.4
5.1
4.6
4.1
3.2
2.5
1.7
Male
17.2
75.4
95.9
95.3
94.4
89.8
84.5
62.3
50.2
32.3
Female
9.2
34.6
35.4
22.2
12.8
8.6
6.3
4.0
3.2
1.7
Source: Omani Women in Labour Market: Facts and Challenges (Al-lawatia, 2011),
Male
20.2
74.5
95.6
97.0
95.3
91.4
80.7
68.3
53.3
32.2
Female
10.7
36.8
46.1
37.9
27.6
17.1
9.8
6.2
4.3
2.6
Chapter 6: Human resources, labour and employment
33
in educational attainment. For men, the main
development is the reduction in the participation
rate for the 20−24-year age group as a
consequence of the greater numbers enrolled in
higher education, as well as an earlier and sharper
decline in the older age group, reflecting the
growth of public sector employment with its
regulated retirement and pension and benefits
schemes.
The oil and energy sector represents about half of
all economic activity in Oman, and any
deterioration in its performance, through declining
reserves or a drop in oil prices, would dramatically
weaken the productive activity of the economy,
apart from limited activities in agriculture. Table 9,
which provides an overview of public sector
finances for the period 2001−2011, highlights the
importance of the oil sector.
6.3 Employment and unemployment
A major problem that needs to be highlighted is
that all sectors in which Oman could diversify will
be significantly (and in multiples) less profitable
than the oil sector. This will result in significantly
lower direct government revenues and a much
reduced tax base, while fiscal contractions may
follow, including a freeze or reduction in public
sector hiring as well as lower expenditure on
infrastructure and public works. However, actual oil
reserves have been augmented as fast as they
have been depleted by new discoveries of deposits
and by advances in extraction technology. This
must not be seen by policymakers as an
opportunity to continue business as usual, but
rather as an opportunity to improve future
prospects by providing significant support to
innovation and diversification and developing
employment opportunities in the non-oil economy.
Determinants of employment
The ultimate determinants of employment in any
country are macroeconomic factors that influence
the level of demand for goods and services and,
consequently, the demand for labour. In Oman, the
key macroeconomic determinants, in the short to
medium term, are oil exports and oil revenues. The
key long-term determinant will be the success of a
diversification strategy, ideally largely driven by
innovation and the development of an industryoriented entrepreneurial culture.
At present, oil revenues finance public spending,
and therefore public sector salaries, which
represent more than 10 per cent of the salaries of
the total workforce and a disproportionately higher
level of wages than those of semi-skilled and lowwage imported labour. The latter wage levels drag
down wage averages in the private sector. Such
downward pressure on wages represents a
powerful incentive for businesses to strategize
based on low capital requirements, low
technological intensity and therefore low
productivity. These in turn deter technological
innovation. However, this factor should not be
generalized as the majority of imported low-cost
labour is employed in the construction sector which
does not require academic qualifications or a high
level of skills.
While these characteristics of the Oman labour
market are unlikely to change dramatically in the
near future, it should be borne in mind that
innovation and technology transfer potential must
be considered with the entire economy in mind.
It is evident that in Oman there is a misalignment
in the provision of higher education and the actual
needs of industry, as mentioned earlier in this
review. The profile of the distribution of degree
courses, in terms of occupationally orientated
disciplines and the humanities, is similar to those
found in many countries around the world,
particularly in Western Europe and North America.
However, the profile of the demand for graduates
is very different, in that there is low demand for
humanities graduates. The resulting imbalance is
likely to exacerbate the problem of unemployment
among graduates, which could give rise to social
problems that are predictable, serious and
enduring.
While planning for human resources development
may seem the obvious policy direction, in practice
it is a dubious proposition to develop targets and
Table 9: Public sector finance, 2003−2012 (OMR millions)
Total revenue
Revenue from oil
Revenue from gas
Other revenue
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
3,305
2,316
4,040
2,905
4,511
4,980
5,921
7,639
6,748
4,491
7,917
5,470
10,625
13,475
87
251
394
614
811
910
731
930
1,173
1,584
3,162
3,226
3,678
5,093
7,798
1,654
9,831
902
884
955
1,141
1,432
1,636
1,527
1,517
Total expenditure
3,189
3,810
4,208
4,936
5,880
7,560
7,429
7,965
10,738
13,555
2,060
Current expenditure
2,373
4,420
4,219
4,791
6,104
8,773
700
1,035
2,661
3,179
967
1,200
3,531
3,858
Participation support
116
114
62
206
326
859
519
578
1,675
1,896
Surplus
116
230
303
44
41
78
-680
-49
-113
-81
Investment
1,697
2,281
2,691
Source: NCSI, Statistical Year Book, 2013: 350−351, updated with data received from TRC.
2,597
2,960
2,887
34
Science, Technology and Innovation Policy Review - Oman
implement policy actions that guide the national
education system to produce predetermined
numbers of competent, skilled and expert workers.
Instead, emphasis should be given to the
promotion of skills related to critical thinking and
problem solving. The fundamental objective should
be to develop a capacity to acquire specific skills
and discharge new responsibilities when needed.
A solid command of the national language, foreign
languages and numeracy are important but
insufficient prerequisites; familiarizing students
with basic notions and skills related to
entrepreneurship are also important.
A functional innovation system based on a high
level of interaction between firms and educational
institutions will help determine which fields of study
and what mix of skills and competencies will be in
demand by industry. Stronger linkages between
productive sectors and knowledge-diffusion
institutions would be important in this regard. They
could trigger a virtuous circle whereby clearly
perceived signals about the needs of the economy
could facilitate improvements in the supply of
human resources, which in turn could represent
the basis for further technological upgrading and
increased demand for science and technology
skills. However, given the obvious excess of
humanities graduates in Oman, compared with the
needs of industry and public sector institutions,
limiting the number of liberal arts degrees offered
may be a practical policy option.
Labour market institutions
The main institutions directly concerned with
employment are the Ministry of Manpower, whose
primary responsibility lies with issues relating to
employment in the private sector, the Ministry of
the Civil Service, the Manpower Registration
Authority, the Oman Chambers of Commerce and
Industry and the General Federation of Oman
Trade Unions. There is no umbrella body that
might provide a forum for coordinating the policies
and initiatives of these institutions, especially since
the Manpower Registration Authority, which was
part of the Ministry of Manpower, became an
independent institution reporting to the Council of
Ministers. This is a major shortcoming from a
national innovation systems perspective, in
particular when informal interactions are hindered
through pervasive risk averseness and information
gate-keeping, as discussed in part I of this review.
The Ministry of Manpower is composed of the
Directorate General of Employment and the
Directorate General of Technical Education and
Vocational Training. In addition, it hosted the
Sanad Programme that promotes self-employment
until that was recently taken over by the Al Rafd
Fund. The Directorate General of Employment is in
charge of the Omanization policy and operates the
Employment Service. It is also responsible for an
inspectorate concerned with compliance with
labour legislation. In the Ministry of Manpower, the
Directorate General of Technical Education,
Vocational Education, Occupational Standards &
Curriculum Development and Training has
introduced a number of training programmes to
support Omanization, such as the Training
Program Coupled with Employment, On-the-Job
Training, the Career Development Program and
Employment, the Vocational Training Program and
the Abroad Training Program.
The Ministry of Manpower is endeavouring to
introduce fundamental changes in the delivery of
education, with emphasis on the learning aspects
rather than on teaching. Methodologies such as
the student-centred learning approach and
compulsory on-the-job training (OJT) at business
and industrial sites at the end of each qualification
level are used to enhance the employment
prospects of job-seekers and in turn improve
Omanization rates. As a result of the OJT
programme, 20−25 per cent of the trainees
secure offers of employment at the training
places themselves.
The Sanad Program, which had been operating
under the Ministry of Manpower, provided support
for the creation and development of selfemployment and small businesses. It offered
general guidance, training in business skills and
soft loans. It also supported the policy of reserving
certain occupations for Omani nationals by
assisting in coordination with local governments
and with implementation. The Ministry of
Manpower’s publication, Manpower 1970−2010,
reports that nearly 28,000 individuals benefited
from the reserved occupations scheme over the
period 2002 to mid-2010. Following the National
SME Development Symposium held in January
2013, Sanad, along with other small funding
schemes for SMEs, was merged with the Al Rafd
Fund, with a budget of OMR 70 million.
The
Manpower
Registration
Authority
is
responsible for keeping records on Omani
nationals seeking employment in general and for
facilitating their recruitment by public sector
bodies. The number of unplaced job-seekers
provides an estimate of Omani unemployment, but
in the past it has been inflated by the inclusion of
those who have found jobs but have not informed
the Registration Authority. To address this
problem, the burden of informing has been shifted
to all employers, be they private and public firms or
institutions. The ultimate objective is for the
Authority to maintain a real-time data base that
records the employment status of all Omani
nationals. A major problem for the registry is that
registered job-seekers may actually be employed
but looking to transfer from their present jobs to
more attractive ones, perhaps in the public sector,
or they may not be available for work at all.
Chapter 6: Human resources, labour and employment
35
Table 10: Employment of Omanis and non-Omanis by gender, 2013
Omani nationals
Male
Public sector
Civil Service
71,244
Diwan & Royal Affairs 20,596
Public corporations
6,764
Non-Omani workers
Female
Total
63,173
134,417
22,594
7,507
3,029
9,793
1,372
1,246
2,618
9,027
27,522
1,998
Male
Female
Total
9,616
7,650
17,266
Total, public sector
98,604
68,200
166,804
8,495
Total, private sector
143,860
38,000
181,860
1,219,349
131
7,638
27,858 1,247,207
Source: NCSI, Statistical Year Book, 2013: 97; NCSI, Monthly Statistical Bulletin, February: 19-20.
Formerly a department of the Ministry of
Manpower, in 2011 it was upgraded and accorded
an independent status reporting directly to the
Council of Ministers.
Employment, unemployment and
self-employment
Table 10 confirms that an overwhelming number of
Omanis work for the public sector while the vast
majority of foreign workers are employed in private
firms.
The success of self-employment initiatives such as
SANAD is difficult to assess, but it is unlikely that
they have a significant impact on the national
economy, however much they manage to improve
the lives of individual successful entrepreneurs. A
major problem is getting such schemes to target
the right audience. Supporting school-leavers who
have neither practical experience nor tacit
knowledge is largely misguided. A particular policy
lapse is assuming that such programmes will
reduce youth unemployment.
From the technology and innovation point of view,
self-employment is also highly unlikely to
significantly narrow the technological gap between
Oman and economies closer to the technology
frontier. For this to happen, no alternative can
replace diversification strategies that focus on
knowledge-intensive, industrial-scale activities and
generate widespread opportunities for knowledge
diffusion and complex productive collaboration.
Public awareness of the success of small
businesses started by individuals with no
experience is limited to the minority that have been
successful, and ignores the multitude that have
failed, while presenting false hopes to Oman’s
youth as well as a delusion of successful policy
outcomes for its policymakers. Self-employment
and entrepreneurship programmes should be
targeted at would-be entrepreneurs who wish to
take the risk of abandoning working for an
employer.
Table 11 provides data on the number of Omani
nationals seeking jobs for the first time, the number
recruited, and the number remaining unemployed,
for the period 2005 to mid-2010. The 2011 data,
when available, can be expected to show major
changes as a result of the political decision in
March 2011 to find jobs for 50,000 Omani
nationals registered as job-seekers.
The data in table 11 suffer from a number of
drawbacks, and should not be seen as a precise
description of the state of unemployment. Many
job-seekers are self-employed or are working while
looking for a better job, and many job-seekers are
not keen to accept a private sector job. Moreover,
the data do not include data of the Manpower
Registration Authority or data on public sector
hiring and employment terminations.
This is an important issue for evidence-based
policymaking and can be remedied by developing
surveys to complement administrative records.
Table 11: Private sector job-seekers and recruitment, 2005−2010
2005
New job-seekers
Unplaced job-seekers
from previous year
Separated workers
Unplaced plus separated
- less inactive job-seekers
2006
2007
2008
2009
48,959
44,992
65,641
88,040
88,402
25,811
2010*
8,512
16,049
17,414
5,134
13,753
15,802
13,646
29,802
33,216
28,364
23,769
53,268
8,395
Total number of job-seekers
62,605
74,794
90,462
116,404
112,171
79,079
Recruited workers
46,556
57,380
66,327
82,231
71,477
48,309
Unplaced job-seekers
16,049
17,414
24,135
34,173
40,694
30,770
Source:
* Note:
For 2005−2007, Ministry of Manpower, Annual Statistical Report 2007; for 2008−2010, Manpower
from 1970 to 2010 (Ministry of Manpower, 2010).
Data for 2010 are only until July 2010.
36
Science, Technology and Innovation Policy Review - Oman
Table 12: Targeted Omanization rates in retail occupations in big outlets, 2003−2007
Category
A
B
C
D
E
Category
A
B
C
D
E
2003
2004
2005
2006
2007
100%
100%
100%
100%
100%
40%
55%
65%
80%
90%
20%
30%
35%
50%
60%
10%
15%
20%
30%
40%
10%
15%
20%
20%
30%
Classification of occupations and jobs in each category
Cashier - Driver - Farash - Lift Driver - Public Relations Officer - Human Resources Director - Security Official
- Trolley Worker – Unskilled Labourer
Shelf Classifier - Promoter- Customer Services Assistant - Skilled Maintenance Technician - Storekeeper
Butcher - Bakery Worker - Flowers Decorator - Fresh food Salesman - Fruits & Vegetables Salesman - Data
Entry Clerk - Accountant
Controller - IT Controller - Fresh food Manager - Store Controller - Store Assistant Manager - Accounts Head
Analysis Manager - Finance Manager – IT Manager
Source: Omanization percentage in the selling and distribution sector as per ministerial decision No.159/2003;
see: http://www.manpower.gov.om/portal/en/OmanisationPlan.aspx (accessed 18 May 2012).
Surveys could generate qualitative data on
subjective and behavioural issues, such as
reasons for seeking (or not seeking) employment,
and the conditions for accepting a job, or the scale
of encouraged unemployment.
in the private sector than in the public sector.
Omanization in practice
In practice, the Omanization policy divides the
economy into different sectors of activity, and
typically establishes targets for the proportion of
Omani nationals working in the various occupational
groups employed in each sector, with a time line for
progressive increases in those targets. Generally,
the Omanization target is inversely related to the
skill level, reflecting the fact that it takes time for
Omani nationals to acquire the training and
experience required in certain occupations. Table
12, which shows the targets for the retail trade by
occupation, provides a typical example.
6.4 Omanization
The development of Oman’s oil sector led to a
heightened demand for labour associated with
rapid economic growth and which could not be met
locally. This resulted in the importing of foreign
labour, much of it to take up low-wage and semiskilled jobs. Soon enough, unemployment for
Omani nationals became a source of social and
economic tensions. In 1988, an Omanization policy
was launched aimed at replacing expatriate
workers with Omani nationals.
The setting of targets is pragmatic and takes
account of the fact that different approaches may
be appropriate for different sectors. Hence, the
disaggregation of the sector may be by activity or
by sub-sector. Table 13 provides an example of
the latter, where targets are set for different
sectors within the tourism industry. For an
occupation that is generic across sectors, such as
truck and bus drivers, the targets may be set in
terms of detailed occupation, without reference to
each sector. In that particular case, a target of 100
per cent Omanization was already set by a
decision in 2005.
Today, Omanization is a core mission of the Ministry
of Manpower. The Ministry sets global targets for
Omanization by sector and occupation, while at the
firm level it steers individual firms to comply with
Omanization targets, using its authority as issuer of
work permits for non-Omani workers. The Ministry is
also responsible for the colleges of technology and
vocational training centres that impart the skills
required by the private sector. As a result, and in
contrast to other GCC countries, in terms of
absolute numbers, there are more Omanis working
Table 13: Omanization targets by different activities in the travel and tourism sector
as per Ministerial Decision No. 165/2003 (per cent)
Activities
2003
2004
2005
2006
2007
Aviation Companies
76
78
80
82
83
Tourist Restaurants
35
50
70
85
100
Travel & Tourism
42
50
60
70
Hotels (3, 4, 5 Stars)
40
50
60
70
75
Car Rentals
52
62
75
85
97
Source: http://www.manpower.gov.om/portal/en/OmanisationPlan.aspx.
80
Chapter 6: Human resources, labour and employment
37
Table 14: Non-Omani recruitment limits by size of establishment
Establishment class
World class
Excellent
Consultative
First class
Second class
Third class
Fourth class
Total
Workforce
Omanization
percentage
National
Expatriate
Total
9,992
13,012
23,004
43.44
24.77
156,399
339,699
496,098
533
1,619
2,152
43,204
254,221
297,425
4,140
110,669
114,809
2,052
3,629
219,949
155,890
157,942
433,737
437,366
1,308,847
1,528,796
31.53
14.53
3.61
1.30
0.83
14.39
Source: Manpower from 1970 to 2010, (Ministry of Manpower, 2010), Table 18.
The Ministry enforces Omanization targets mainly
by controlling the recruitment of non-Omani
workers by restricting permits. While Article 18 of
the Oman Labour Law requires that foreign permits
be issued only if “there are not among the Omanis
the sufficient work force for the posts or
occupations” and if “the employer has complied
with the prescribed percentages of Omanization”,
the actual guidelines for the recruitment of nonOmani workers differ for companies of different
sizes as defined by capitalization. Table 14 shows
the distribution of Omani and non-Omani
employees by category of employer in 2013.
Private sector companies seeking to recruit Omani
nationals are required to submit details of the kinds
of workers required. Omani nationals seeking work
in the private sector attend personal interviews at
the Ministry of Manpower and their data are
entered or updated in a general database of jobseekers. The Ministry uses the database to match
candidates to the vacancies notified by an
employer, usually two candidates for each
vacancy, and then arranges interviews of the
candidates with representatives of the employer
and under the supervision of Ministry staff.
When private sector hiring occurs through direct
contact, without the mediation of the government
employment service, companies that recruit Omani
nationals are still required to submit the
employment contracts to the Ministry of Manpower
for approval. In addition, Article 14 of the Labour
Law of 2003 requires every employer to submit to
the Ministry a detailed statement on the number of
workers classified according to their type of job,
occupation, wages and gender. Private firms must
also submit a statement giving reasons for not
filling vacancies and a statement on the expected
increase or decrease of employees in the
subsequent year.
Following the implementation of the Omanization
policy, there has been a relative increase in the
number of Omani workers compared with nonOmani workers. Between 2000 and 2010 the
number of paid Omani employees in the private
sector increased from 56,000 to 190,000, while the
number of non-Omani workers only doubled, from
half a million to one million. 50 From a regional
perspective, Oman is unusual among GCC
countries in that a relatively large number of Omani
nationals work in the private sector.
Incentives and preferences for
public sector jobs
The success of the Omanization policy in the long
term will continue to depend on factors affecting
the supply of Omani nationals willing to work in the
private sector, and factors affecting the demand for
Omani nationals by private sector employers.
There are currently about one million jobs staffed
by foreigners working in Oman’s private sector.
Based on a population of 2 million nationals and
about 100,000 new entrants into the job market
each year – many of whom will express a strong
preference to work in the public sector – it is
unlikely that there will be a dramatic change in the
near future. Some determinants are cultural, while
others are objective and can be expressed as
measurable incentives. A willingness to work in
services and the structure of earnings and benefits
on offer are factors that are often cited. While
private firms can offer competitive remuneration
and can outbid public institutions in their quest for
expertise, at many interviews held during the
UNCTAD STIP mission it was often heard that
many Omani nationals working in the private
sector will have accepted such employment only
because they have not found employment in the
public sector.
One of the main reasons for the strong preference
for jobs in the public sector was said to be higher
salaries. Data presented in tables 15 and 16
attempts to describe the options and dilemmas that
Omanis face in the job market. The data indicate
that the public sector pays secondary school
graduates (the largest group by number) 45 per
cent more than they receive in the private sector
(OMR 475 vs. OMR 326). In Oman, as in other
countries, there are large wage differentials at a
given educational level in the private sector, so
38
Science, Technology and Innovation Policy Review - Oman
Table 15: Civil service monthly pay and allowances, by level of education, April 2014 (OMR)
Basic
Annual
House
Salary
Allowance
Rent
First
2,600
80
Third
1,500
40
Grade
Second
Fourth
1,950
60
Electricity
Water
Telephone
Transport
Cost of Living
600
60
40
40
390
50
500
55
35
35
225
50
550
60
40
40
290
50
1,260
40
450
50
35
35
190
50
Sixth
950
20
400
45
30
30
145
60
Eighth
730
15
350
40
25
25
110
60
Tenth
460
15
250
30
20
20
70
60
Twelfth
360
8
120
25
15
15
55
80
Fifth
1,080
Seventh
830
Ninth
550
Eleventh
400
25
425
20
375
15
275
15
180
50
40
30
25
30
30
30
160
30
20
125
20
20
50
60
80
20
60
60
80
Thirteenth
310
8
100
20
15
15
50
Fifteenth
250
7
80
20
10
10
40
30
100
Seventeenth
200
6
60
10
6
5
30
100
Fourteenth
270
Sixteenth
230
Eighteenth
170
8
100
6
80
5
60
20
10
10
10
10
6
5
6
80
40
5
90
90
30
100
Source: TRC, Ministry of the Civil Service.
that educational levels do not guarantee a
particular level of wages. Indeed the figures
indicate that there are almost 6,000 university
graduates earning less than OMR 600 per month,
while almost 7,500 workers with a secondary
degree or less earn more than OMR 600 per
month. Regarding those with advanced university
degrees, a comparison of salaries between the two
sectors is much less clear. The fact that foreigners
with a secondary degree or less earn less than the
minimum wage of OMR 350 set for Omani
nationals is indicative of potential strains in the
labour market.
full two-day weekend, and prescribed annual
salary increments of 3 per cent. However, there
have been suggestions that foreign workers are
generally more willing to tolerate some of the
following irregularities: an adverse environment,
a requirement to be available at irregular or nonstandard hours, high expectations of the speed
and standard of execution of tasks, and low
expectations of promotion or advancement.
This may be a result of incentives, such as
significantly poorer earnings prospects in countries
of origin, and should not necessarily be seen as a
work culture issue. Moreover, it is questionable
whether this applies to executives, entrepreneurs
and specialists holding advanced degrees and with
significant work experience or those who are
owners or partners of a business.
Working hours and working conditions are
stipulated by law and enforced by the Ministry of
Manpower. Firms are obliged to observe the
minimum standards of the nine-hour work day, the
Table 16: Private sector monthly pay by level of education, 2012 (in OMR)
200-300
301-450
451-600
601-750
PhD
0
0
3
1
751+
79
Total
83
Average
MSc
0
0
88
48
716
852
849
Postgrad Dip
0
0
10
6
48
64
820
884
Bachelor's
1,562
1,828
2,541
2,072
5,022
13,025
Diploma
3,987
4,138
2,374
1,205
1,936
13,640
466
7,577
1,905
650
638
47,499
296
Secondary graduate 54,209
16,078
5,631
2,186
2,548
80,652
639
326
Preparatory
36,729
Primary
18,759
3,662
3,437
1,076
713
192
191
23,517
287
Illiterate
8,501
829
149
39
24
9,542
269
Read & write
Total
22,936
146,683
37,549
14,490
392
6,791
762
11,964
Source: Ministry of Manpower, see http://www.manpower.gov.om/Portal/media/Statistics.aspx.
28,603
217,477
299
339
Chapter 6: Human resources, labour and employment
In interviews with STI stakeholders during the
UNCTAD mission for the STIP Review in 2013, a
number of explanations were advanced for the
current stratification of the labour market. One
indisputable fact is that, however low the salaries
for unskilled and semi-skilled labour in Oman, they
are sufficient to attract an endless supply of jobseekers from abroad. Two medium- to long-term
processes may change this situation. One could be
a general wage deflation in Oman due to the
shrinking of the oil economy and the failure to
replace it with sufficiently high productivity and
high-margin industries. The other could be
economic development in the countries and
regions that are the sources of low-wage labour
imports, a factor that is beyond the control of
Omani policymakers, unlike the first one.
From a broad development perspective, the
success of an Omanization process would be more
easily compatible with the maintenance of living
standards and socio-political stability if it were
driven by a strategy of employment creation rather
than employment substitution. This implies an
increase in productivity levels through guided
capital allocation and technological absorption and
development. The challenge would thus be not to
replace foreign workers with Omani nationals, but
to develop stronger demand for higher productivity
workers through industrial diversification.
With regard to developing an innovation culture,
deeper research and consideration is needed for
promoting on-the-job training, developing a culture
of life-long learning and facilitating the transfer of
tacit knowledge. These are issues that an
innovation policy can support and stimulate, but
which ultimately need to be tackled by business
and industry. With regard to the training of nonOmanis, employers can make this investment with
some, but by no means absolute, level of surety
that the employee will remain for the duration of
the contract, as there are formidable disincentives
to changing jobs common to all expatriate staff, i.e.
changing jobs can be a fundamentally disruptive
process not easily undertaken in a foreign country
and without a broad social and family network. In
the case of Omani nationals, however, the
acquisition of transferable skills can often lead to
job-seeking elsewhere, unless accompanied by an
appropriate wage rise. If the skills are such that the
employee can secure a public sector job with a
significantly higher wage that the current employer
cannot match, the employee will be lost, and so
also the investment in training.
Policy options and effects
Wage changes are the main lever for Omanization
and destratification, regardless of whether they
occur through a reduction of nominal and/or real
wages in the public sector or an increase in wages
in the private sector. A fundamental concern is
39
maintaining social stability and avoiding social
tensions, grievances and economic uncertainty
that can paralyse public development policy as
well as the willingness of firms to invest and
operate with a long-term perspective.
Rationing of permits for non-Omani workers
through a permit auction system makes them
scarce and increases their market value. Permits
can be classified into a number of categories
according to skills, education and competencies,
with assigned quotas for each category.
This would allow policymakers some leverage over
incentives, and could be used to influence national
human resources development that would be in
line with strategic development objectives,
including the objective of diversification of the
economy through the greater use of science and
technology to innovate existing and new products
and services. The reduction of non-Omani labour
is likely to drive private sector wages up towards
and beyond levels in the public sector.
As a result of the wage increases, firms should
expect profits to fall and many will attempt to
restore profit margins by raising prices; in some
sectors it may also encourage investment in
labour-saving equipment and process innovation.
The overall effect will reduce labour’s share in
national income, particularly the participation of
employees in the public sector, where there
should be no wage increases if the policy is to
have an effect. A total fall in the demand for
goods and services may be offset to some extent
by increased earnings through higher wages in
the private sector, and by Omani nationals
switching to employment in the private sector, as
well as through a reduction in transfers of wages
earned by foreign workers in Oman to their home
countries. The production of goods or services
that depend on the availability of cheap foreign
labour may no longer be economically viable with
existing technologies and processes, and may
stimulate
innovation
and
investment
in
technology.
Omanization of the private sector is potentially a
much more constructive approach to resolving the
problem of unemployment. With destratification of
the labour market, a large number of the one
million jobs currently held by foreigners may
become attractive to Omani nationals. An increase
in the employment of Omani nationals in the
private sector is one of the objectives and, at the
same time, an underlying basis for the economic
diversification strategy. As stated earlier, the
overall preferable outcome of the Omanization
policy should not be merely the replacement of
foreign workers with Omani nationals, but the
achievement of overall levels of productive
employment in the economy, with a significantly
higher share of Omani workers employed.
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Science, Technology and Innovation Policy Review - Oman
6.5 Conclusions and policy recommendations
Labour supply and demand
From the point of view of the development of STI
capabilities in Oman, the labour market suffers
from two basic imbalances. The first is that Oman’s
education system produces too many graduates in
the humanities and liberal arts and a clearly
insufficient number in technical and scientific fields.
The second is that Oman’s growing economy and
relatively open job market attracts foreign workers
with schooling up to secondary school level who
are willing to work for less than the prescribed
minimum wage for Omani nationals.
The policy solution so far has been to hire the
excess Omani graduates in public service jobs
and, through the Omanization process, encourage
private firms to take on an increasing number of
Omani nationals. However, these solutions may
fall short of what is needed to promote an
innovative and diversified economy with a view to
moving away from an excessive dependence on oil
revenues.
Bringing in line the number of places for nonvocational studies should be a policy priority. In
order to improve access to private sector jobs that
offer comparable remuneration and work
conditions to those currently found in the public
sector, education and training institutes need to
focus on producing the kinds of skills and expertise
needed by firms and industry. However, achieving
this requires active interaction between industry
and educational institutions which is more likely to
occur within the context of an innovation system
strategy.
A major practical problem for policymakers is the
paucity and poor quality of relevant data, as well
as uncertainty as to its interpretation. For example,
data on persons seeking public sector employment
may not be completely accurate, as many
individuals may in fact be employed in the private
sector while being registered with the Manpower
Registration Authority in the hope of changing jobs
or in the hope of receiving a monthly
unemployment allowance.
Managed growth of public
sector employment
An important policy tool that can be implemented
with immediate effect is management of
employment growth in the public sector. Public
service jobs have a variable impact on
development policy targets and can play a number
of roles. The effects on diversification and spurring
innovation differ depending on whether jobs are
created in back-office administration, public health
and extension services, or in the provision
of education.
A second, but equally important issue is that
public sector job growth needs to be managed
conservatively bearing in mind what is happening
in the productive economy and in the private
sector. It would be prudent to bring public
expenditure and public service job creation in line
with forecasts of oil revenue streams that take
into account the fact that oil depletion or a fall in
oil revenues is a probable outcome even if the
details are uncertain. From a long-term
perspective, the two issues should be delinked,
and public employment targets should be a
function of desired levels of public service supply
and compatible with the needs of a diversified
economy’s productive sectors.
Managing the expectations of Omani nationals
seeking employment is an important task, and as
long as they believe the Government is willing to
create further public sector jobs, it will likely
reinforce their strong preference for work in that
sector. Due consideration should be given to
reducing the proportion of young people
completing their education in disciplines such as
the humanities and liberal arts, which do not
equip them with the kinds of skills that are
needed in the private sector. The Government
and its educational authorities should not provide
the opportunity for studies in such disciplines
unless they are prepared to continue to provide
public sector employment for the graduating
students. An innovation system approach would
necessarily mean strengthening the linkages
between firms and educational and training
institutions so that the latter develop in students
the skills and capabilities needed by industry. It
would also involve significant interaction between
various socio-economic groups and government
agencies at every stage of policy planning,
implementation and evaluation of human
resources development.
Destratification of the labour market
Most of the jobs in the private sector in Oman that
are held by non-Omanis, and which are unlikely
ever to be acceptable to Omani nationals, are
concentrated in semi-skilled and skilled labour
where wages are typically below minimum wages
prescribed by Omani law which is applicable
exclusively to Omani nationals. While there is a
general preference for public sector jobs, as
wages and benefits are higher and working
conditions are better, this does not apply as much
to jobs higher up in the wage, education, skills
and experience ladder. There have been
proposals for remuneration in the public sector to
be brought in line with that in private firms.
However, this may not be viable in current socioeconomic and cultural conditions and with the set
of incentives that exist for workers and
employers. It may also lead to tensions
and instability.
Chapter 6: Human resources, labour and employment
Wage levels should be more closely aligned with
productivity across the economy. Since it is
impractical to reduce public sector wages in
absolute terms, restraining future increases should
be a minimum policy target. Accessing higher paid
jobs in the private sector then becomes an issue of
developing appropriate human capabilities and
skills, developing new employment opportunities in
higher productivity sectors as well as regulating
foreign work permits. To increase private sector
pay, a more careful management of immigration
will be needed. This should include consideration
of the economic, but also the social realities –
including the positive impact of the social and
academic diversity of immigration and the
advantages it may present to an innovation-friendly
environment – which the presence of a high
proportion of foreign workers has created in Oman.
Educational standards and attainment
The under-attainment of males in education,
compared with females is a major social problem
in Oman. This divergence affects both the
economy and society, and urgently needs to be
addressed. More broadly, and similar to other GCC
countries, the educational attainment of both males
and females is low by international norms.
Females perform better than males, but even their
performance needs to be improved substantially if
it is to attain international norms. In addition,
female students often do not find employment
matching their competencies and skills, as
fragmentation works against communication
between industry and academic and educational
institutions.
It is beyond the mandate of this report to propose
specific policies to improve the quality of the
Omani education system. However, it is clear that
in order to improve technological and innovation
capabilities in the country, the quality of education
and the problem of under-attainment should be
addressed. This will require both improvements in
the provision of education by the schools and in
the take-up of educational opportunities by families
and their children. It is essential that national
expectations concerning standards of achievement
be raised. Without going into specific measures to
be taken, international best practices provide a
number of options to consider in terms of providing
greater incentives for higher achievement. In this
regard it is suggested that improvement in the
standards of teaching should continue to be a top
priority. A key reason for this is that improving the
quality of the teaching staff will take less time than
changing cultural attitudes.
Following a Directive from His Majesty Sultan
Qaboos, the Ministry of Education has established
a Specialised Centre for Teacher Training. Its aim
is to develop highly skilled, confident and
motivated educators through sustained, intensive
41
and accredited professional development that is
benchmarked against international standards. The
Specialised Centre’s first training Programmes
began in March 2014.
Fiscal sustainability
The fiscal sustainability of the public sector is
critical for labour policy, as it is Oman’s largest
employer: one in three Omanis work in the public
sector. Public sector salaries, together with public
procurement, play a very significant role in
aggregate demand, and hence stimulate
employment in the private sector. Today, the public
sector, which serves as the “employer of last
resort” for Omanis, is viable almost entirely
because of oil revenues. Therefore it is essential
that strategies aimed at developing innovative and
diversified manufacturing and services sectors and
reducing or replacing the dominance of the oil
sector in the Omani economy be well managed in
a way that does not imperil public finances. The
core problem is that it is unlikely that the non-oil
economy can generate sufficient profits to
completely replace oil revenues. Strategies that
seek to develop technology that could use or
generate products and services that may also have
an important knowledge content, and are therefore
capable of generating higher profit margins, may
not fit in well with the objective of developing
labour-intensive sectors, such as the tourism
industry.
A second consideration is the need to plan a
transition towards an alternative fiscal system in
which public revenue draws more on the incomes
generated by non-oil production activities. This
would necessarily be a long-term undertaking that
would involve a profound change in the behaviour
and the mentality of economic and social actors,
and in the balance of Omani and non-Omani
labour supply. It should include the design of
incentives that encourage investments and
behavioural changes that are more supportive of
technological upgrading and innovation.
Strategic priorities
The key issue for the national economy is the
development of new industries to provide more
jobs with higher productivity and to push forward
Oman’s growth, while gradually reducing the role
of oil production in the economy. This inevitably
means spurring processes of innovation through
the strategic development of a national innovation
system. The creation of employment opportunities
for Omani nationals and the maintenance of a tax
base that will support government expenditure are
interdependent objectives. Hence, it is important
that the policies and initiatives of the different
branches of government take into account
simultaneously impact of diverse policies,
preferably within the framework of an innovation
42
Science, Technology and Innovation Policy Review - Oman
system
approach.
This
would
require
strengthening the capacity for conducting labour
surveys and economic analyses jointly by the
Ministry of Manpower and the Supreme Council.
7. Intellectual property, innovation and
diversification
7.1 Introduction
A well-designed and implemented intellectual
property rights (IPR) framework can encourage
innovation and enable technology transfer. It
should allow inventors and creators to focus on
their competencies and free them from the need to
become entrepreneurs. For entrepreneurs, it
should reduce uncertainty in the commercialization
of an innovation. From an economic development
perspective, the policy attention that IPRs warrant
needs to be closely considered in the light of local
specificities, as there can be no universal policy
recommendation for all countries.
This section proposes that in the case of Oman, a
country with a thriving oil sector, a population of 3
million, a GDP per capita of $21,390, a long history
and tradition of trade, and with a fundamental need
to spur innovation and diversify its economy, an
IPR framework requires committed support from
policymakers in order to provide an effective
incentive and enable innovation. Oman’s
policymakers are striving to energize the national
innovation
system,
including
by
creating
awareness about the use of IPRs.
Being an economy that, outside the oil sector,
operates below the technological frontier,
increasing the innovation capacity of firms and
diversifying the economy will depend on Oman’s
ability to identify and import, adapt, absorb and
diffuse technology, in addition to creating its own
technological knowledge. In an early phase of
development, economic policy may need to focus
on improving the national capacity to import and
absorb technology. With progress in development,
technology
creation
becomes
increasingly
important as firms and industries catch up with
those in developed markets. The challenge of
innovation eventually moves into creative
territories as the number of immediately
transferable and readily applicable technological
solutions slowly decreases. In a parallel shift of
circumstances, intellectual property (IP) increases
in economic importance. Oman is at this
juncture today.
The fact that academic debate is not unanimous
about the level of effectiveness of IPR is a certain
indication of the complexity and dynamism of
national innovation systems and the vibrant nature
of economic development. There are examples,
from earlier as well as recent industrialization
processes, where a weak IPR regime has enabled
reverse engineering and imitation as paths to
technology absorption and innovation, such as in
the Republic of Korea and China (Yu, 2007).
However, countries that have used imitation and a
weak IPR regime to innovate and diversify their
economies eventually embark on policies for
strengthening IPRs as development gains are
captured. Therefore, Oman’s policymakers should
accept that the success of implementation of an
IPR regime should be measured not only in legal
terms, but also by its socio-economic impact.
While IPRs may not be a prerequisite for
development in the early phases, when
technological capacities are weak and economic
output low, as an economy and its sectors and
industries grow, they increasingly become an
integral and essential part of a complex
innovation system.
Creating capacities to use IPR instruments to
promote and support innovation and improving
awareness about the role of IPRs in national
development is important at this stage of Oman’s
technological development. Policymakers should
also
highlight
the
role,
necessity
and
complementarity of proprietary and public
domains, as well as their strategic role in spurring
competition and innovation-based economic
growth. IPRs need to be seen as a critical policy
component of a national innovation policy that will
help Oman to become a knowledge-based
economy
with
a
functional
national
innovation system.
7.2 IPR legislation in Oman
The first IP law in Oman was passed in 1987 as
Royal Decree No. 68/1987 – Law on Trademarks
and Trade Indications. But it was mainly after
Oman acceded to WIPO in 1996 and became
party to its treaties that there was a rapid
acceleration in the development of IP laws in
Oman, with the creation of a comprehensive
legal framework for protecting copyrights,
trademarks and patents. A second major
development occurred after Oman became a
member of the WTO in 2000, which led to a review
of its legislation in order to conform to the
provisions of the TRIPS agreement. This was
followed in 2004 with Oman’s signing of a free
trade agreement with the United States, which
entered into force in 2009 and which required
Oman to further adjust its IP legislation.51
Laws and treaties
The legislative foundations for IPRs in Oman are
established through its participation in key
international treaties, conventions and protocols,
and through the implementation of domestic IP
laws. Current IP laws cover procedure, and define
civil and criminal breaches and corresponding
remedies. What may be missing is an
Chapter 7: Intellectual property, innovation and diversification
43
Box 5: Oman’s Intellectual Property Laws and Treaties
Laws:
x Law on the Protection of Breeders' Rights in New Varieties of Plants, Royal Decree No. 49/2009
x Industrial Property Rights and their Enforcement for the Sultanate of Oman, Royal Decree No. 67/2008
x Law on Copyright and Related Rights, Royal Decree No. 65/2008
x Law on Consumer Protection, Royal Decree No. 81/2002
x Law on Civil and commercial procedure Royal Decree No.29/2002
x Law on the Protection of National Heritage, Royal Decree No. 6/1980
x Executive regulations of the Law on Copyright and Neighboring Rights, Ministry of Trade and Industry Ministerial Decree No.
103/2008
x Regulations No. 105/2008 under the Law on Industrial Property Rights & Their Enforcement for the Sultanate of Oman
x Omani Penal Code No. 7/74 (1974)
x Basic law of the Sultanate of Oman, last amended by Royal Decree No. 99/2011
Treaties:
x Registered with Gulf Cooperation Council (GCC) Patent office;
x Member of the World Trade Organization, Royal Decree No: 112/2000;
x Signatory of Trade Related Aspects of Intellectual Property Rights (TRIPS);
x Member of WIPO Convention since February 1997, Royal Decree No: 74/96;
x Signatory to the Paris Convention since July, 1999, Royal Decree No: 63/98;
x Member of the Berne Convention since 14th July 1999;
x Member of the Patent Cooperation Treaty since October 2001, Royal Decree No: 37/2001;
x Party to the Hague Agreement Concerning the International Registration of Industrial Designs since March 2009;
x Acceded to the Madrid Agreement on International Registration of Trademarks in 2007.
Source: WIPO, see http://www.wipo.int/wipolex/en/profile.jsp?code=OM.
accumulated record of experience and practical
knowledge among IP authorities, courts and the
legal practice. Box 5 lists the IP laws and treaties
and conventions to which Oman has become a
party so far.
The Law on Industrial Property Rights and their
Enforcement for the Sultanate of Oman (Royal
Decree No. 67/2008), together with the Law on
Copyright and Related Rights (Royal Decree No.
65/2008), regulate the majority of IP issue, and
replace the Law on Trademarks (Royal Decree
38/2000), the Law on Patents (Royal Decree
82/2000), the Law on Industrial Designs (Royal
Decree 39/2000) and the Law on Copyrights
(Royal Decree 37/2000).
Industrial property rights
The Law on Industrial Property Rights stipulates
that a trademark must be registered in the Register
of Trademarks and Trade Names at the Ministry of
Commerce and Industry. Trademarks are
protected for 10 years, and may be renewed on
expiry. Infringement of a registered trademark is
punishable with imprisonment of up to two years or
a fine of up to OMR 2,000. Punishable offences
include the manufacture and trade of counterfeits
and misleading the public. Under the Law,
preliminary injunctive relief is available for
trademark infringement. The Law also provides a
list of permitted trademarks.
Regarding patents, the Law on Industrial Property
Rights stipulates that an invention is patentable if it
is new, contains a novel idea and is worthy of
industrial application. At the same time, it must not
be inconsistent with public morals, undermine
national security, or be incompatible with Sharia
Law. The work for hire doctrine applies, and when
a patent arises from an employee’s work, the
employers become the owners of the patent, while
the inventor is entitled to certain remuneration.
Patent applications are submitted to the IP
Department of the Ministry of Commerce and
Industry. Patents that are also registered at the
GCC Patent Office in Riyadh acquire protection
throughout other member States of the GCC. 52
The GCC Patent Regulations are fully compatible
with Oman’s legislation on patents.
On the issue of industrial design, the law protects
industrial drawings and patterns provided they are
registered with the Ministry of Commerce and
Industry. The creator is the owner, and the design
must be original and, again, must conform to
common standards of decency. Protection is
awarded for a period of 10 years. Geographical
indications are also protected under the Law on
Industrial Property Rights which aims to protect
natural, agricultural, industrial, and handicraft
products having a distinctive characteristic or
reputation attributable to their geographical origin.
Copyright
The Law on Copyright and Related Rights defines
an author’s works as original literary, scientific,
technical, and cultural, irrespective of their
monetary value. Aside from economic rights
related to reproduction, this law defines moral
44
Science, Technology and Innovation Policy Review - Oman
rights as the right of an author to attribution in the
manner of his or her choice, and the right to object
to any distortion, mutilation, modification or other
derogatory action in relation to his or her work that
could prejudice the author’s honour or reputation.
The duration of copyright protection is the lifetime
of the author plus 70 years starting from the
beginning of the year following the death of the
author.
Similar
to
trademarks,
copyright
infringement is punishable by imprisonment for up
to two years or a fine of up to OMR 2,000. Besides
copyright protection, the Law on Copyright and
Related Rights provides additional protection for
performances, sound recordings and broadcasts.
International treaties
As a member of the WTO, Oman is party to the
TRIPS Agreement and is bound by its obligations.
As a member of the GCC, the GCC Patent
Regulation and Implementing Bylaws apply in
Oman. Oman is also party to the Paris and Berne
Conventions,
the
WIPO
Copyright
and
Performances and Phonograms Treaties, the
Madrid Agreement and the Hague Agreement
among others (see box 5). In this sense, Oman is
fully integrated into international IPR networks
of cooperation.
Oman is also party to the WIPO Patent
Cooperation Treaty. The Treaty aims to facilitate
the filing and protection of patents internationally.
A single filing can secure an effective filing date in
all of its member countries. To date, the Treaty has
been adopted by 146 countries.
7.3 Strategic considerations and IPRs
Developing national IP policies that are adapted to
the specific needs of the economy at its stage of
development is a strategic component of
knowledge- and innovation-based economic
development and diversification. In order to
function effectively in the context of an innovation
system framework, IP strategy needs to be
matched with human capacity among the legal
professions and authorities, as well as among
research institutions, entrepreneurs, inventors and
innovators.
Strength of the IPR regime and its
contribution to innovation
The strength of the IPR regime can be assessed
by looking at the level of harmonization with
international legal frameworks for IP, as well as the
capacity to assess and register IP and implement
legislation, competently rule on disputes, and
implement decisions and enforce legal remedies
where justified and deserved. A functional and
strong IPR regime means that a country has
committed resources and developed human and
institutional capabilities. An IPR strategy would aim
to develop these capabilities as a component of a
national innovation system, in cooperation with STI
stakeholders, and in line with overall national
development objectives and strategies.
However, the critical contribution of IPR to
technology and innovation-led development may
be even more closely linked to microeconomic
factors, particularly the technology use and
capacities of sectors and firms, and the
competitiveness of the national and international
markets in which they operate. Certainly, more
advanced firms and sectors may benefit from
innovating by adopting technology through
licensing, and Oman’s IPR regime would need to
support this. Other industries or sectors are less
developed and less competitive, and their
implementation of IPRs will be weaker due to a
lack of resources and capacities. In such sectors,
technology owners – such as multinational firms
from developed countries – will often prefer intrafirm trade with a local affiliate or foreign direct
investment (FDI). However, such circumstances
are not static and can be influenced by policy.
IP and diversification
The development of stronger IP capabilities should
be an important part of Oman’s strategies to
industrialize and diversify in order to reduce its
dependence on the oil sector. This involves
several important considerations.
First, Oman’s policymakers need to be able to
identify all relevant international sources of
technology transfer and establish the needed IPR
capacities for their use. For example, technology
licensing could be important when striving to spur
innovation and economic diversification. This
particular mode of technology transfer depends
entirely on a functioning IPR regime. Other
strategies such as those based on FDI or domestic
innovation may require a different mix of policies,
institutions and capacity-building. They may also
require greater efforts to improve enforcement and
performance on conflicts relating to trade and
industrial secrets and non-disclosure, or developing
local capacity that can facilitate the patenting and
commercialization of domestic innovation. However,
having a legal base in the form of IP laws is a
fundamental but insufficient precondition; it is also
important to strengthen the human and institutional
capacity to design an IPR regime in a way that
benefits strategic directions set out in the national
development policy, particularly its innovation-driven
diversification goal.
Second,
domestic
R&D,
invention
and
commercialization of innovation, require that
research institutions and firms develop their own IP
strategies. They need to move away from purely
“work for hire” policies towards enabling shared or
joint IP registration and filing in order to provide
Chapter 7: Intellectual property, innovation and diversification
greater incentives for creativity and innovation to
staff and employees, and encourage and facilitate
the commercialization of research outputs. It is
necessary to bear in mind that registering and
maintaining IP is a cost for the innovator, and
consequently a cost for the country. This is
particularly important for small countries like Oman
that may increasingly seek worldwide IP protection
for their research and knowledge institutions, and
entrepreneurs and innovators.
If Omani invention and innovation is to be globally
competitive, relevant and have a positive impact
on Oman’s export performance, it may need to
enhance its use of IPRs. However, owning and
managing IPRs to this end requires paying fees for
international filing and translation, examination and
approval, and annuities and renewals in export
destinations and potential markets. Although at the
current level of Omani participation in global
markets this is an issue of limited relevance,
international protection of IPRs may require
significant financial outlays, and therefore needs to
be openly discussed among STI stakeholders. For
example, a comprehensive patent registration
covering North America, Europe and select middleincome developing countries would cost about
$150,000 per year per patent. 53 (LSE, 2006) If
Omani IP is found to be violated, enforcing patents
through litigation abroad may also require very
large financial outlays while bearing the risk of an
uncertain outcome.
Given the size of firms in Oman’s SME sector, it is
clear that for many of them the costs of
international patenting are prohibitive. However,
there are a number of approaches to help
overcome this problem. The first is for several
institutions to share the cost of patenting: Omani
firms partnering with local academia and in
cooperation with large local or international
corporations may be able to pool sufficient
resources. However, in order for such an approach
to work, the various institutions involved need to
support such interaction each in their own
guidelines on IP cooperation and outcomes.
Where there is a keen public and strategic interest
to establish IP, for example over certain aspects of
natural and biological heritage (such as the project,
Database of Oman’s Genetic Resources),
government funding would need to include a
budget for IP filing, registration and maintenance.
Third, policymakers need to have a clear picture of
the full scope of IP policy, including the fact that
creative endeavours and scientific research feed
on and require access to an ever-expanding global
network of scientific and technological knowledge.
Key public policy concerns would include making
publicly funded research openly accessible and,
when appropriate, distributed under public and
open copyright licences, while patents that are the
result of publicly funded research should be
45
considered for licensing under non-exclusive terms
and conditions.
Open access is essentially a copyright policy that
proposes that there should be an explicit choice for
the type of distribution licence a publicly funded
work may use in order to maximize its social utility
and, by association, its innovation impact. While an
“all rights reserved” copyright may work for literary
fiction, for example, a scientific research paper
may have greater impact if distributed under a
“some rights reserved, some rights allowed”
copyright. Given the large public funding of tertiary
education and of the attached research institutions,
the question of open access needs to be subject to
a policy discussion as it is an IPR strategy issue.
In addition, there are vast amounts of knowledge
and technologies already in existence with recently
expired patents − and therefore in the public
domain − or under open and public licences.
These need to be identified and exploited as part
of a technology transfer policy. It should be noted
that open and public licences also require IP
protection in conformity with their explicit terms
and conditions, and may require the intervention of
the IPR authorities. As innovation implies a novel
application of a technology in a particular location,
but not globally, IP concerns should guide
entrepreneurs and academics to explore
technologies and knowledge under open and nonexclusive licences, or those that are in the public
domain, before deciding to buy, import or develop
proprietary solutions.
Finally, beyond the established IPR legislation,
policymakers may need to consider taking
decisions on several non-legislative IPR issues.
IPR policy should be fully integrated within an
overall innovation system framework, and should
be used to achieve an innovative and diversified
economy. A critical precondition for this will be the
establishment of a large number of high-quality
linkages with all active stakeholders in the
innovation system, both national and international.
The establishment of technology transfer offices
and technology and innovation support centres is
an important component of such a policy.
Regionally, the only active support centre at
present is located at the King Abdulaziz City for
Science and Technology in Saudi Arabia; much
can be gained by establishing linkages with it and
drawing on its existing experiences.
Institutional considerations
Finally, there are a number of particular
considerations relating to the strategic issue
discussed above. For example, the Ministry of
Commerce and Industry is currently responsible for
the IPR office. While this may be a workable
arrangement today, it is also subject to internal
budgetary and institutional considerations that any
46
Science, Technology and Innovation Policy Review - Oman
public organization needs to consider in the
context of a changing economic and social
environment. If the Ministry should face an
institutional or budgetary crisis, how would this
affect the IP department? IPR has as much to do
with industrial patents as with health and
education, and given its multidisciplinary nature,
the establishment of a specialized IPR institution
should be studied without prejudging the outcome
and the recommendations emerging from such an
exercise.
complexity of international IP issues. Another
problem is that all court hearings are in Arabic,
while any documents prepared in a foreign
language must be translated into Arabic. There is
no principle of precedent, and a judge is not bound
by prior decisions, as in common law. Most
judgments can face multiple appeals without
significant cost sanctions and, as a result, disputes
can be protracted. Damages are typically awarded
to compensate for direct losses but there is no
clear-cut definition of what constitutes a “direct” or
an “indirect” loss. Foreign judgments are not easily
enforced, and may often be used only as evidence
while the case is heard in an Omani court anew.
Finally, while there is no doubt that the legislation
indicates a clear goal of protecting IPRs in Oman,
many of the laws designed to protect IPRs remain
untested.54
Oman’s judicial system and IPR
implementation
The legal system in Oman is based primarily on
Islamic law and Sharia Law. The Basic Statute of
Oman (Royal Decree No. 101/1996) stipulates the
rule of law, the impartiality of judges and the
independence of the judiciary. Article 61 on the
independence of judges stipulates that there is no
power over the judges in their rulings except the
law, that no party may interfere in a lawsuit or in
matters of justice, and any such interference is a
crime and punishable by law. The law specifies the
conditions and procedures for the appointment of
judges, their transfer and promotion, and the
security offered to them. The Sultan of Oman
makes all judicial appointments (Article 42 of the
Basic Statute) and presides over the Supreme
Judicial Council. The Supreme Judicial Council
oversees the judiciary (Article 66 of the Basic
Statute) and formulates judicial policies. Only
Omani lawyers are permitted to practice in the
courts. Oman has a three-tier court structure: (1)
courts of first instance, (2) appellate courts, and (3)
the Supreme Court. There are six appellate courts
and 45 courts of first instance. Courts of first
instance constitute the lowest rung of the judicial
hierarchy. The Supreme Court can hear appeals
and overturn or confirm the rulings of all the lower
courts. The first instance courts are competent to
hear cases alleging infringement of intellectual
property.
7.4 IP in practice
In reality, only a handful of patents have been filed
by Omani nationals, most of which relate to civil
engineering, and were filed and granted abroad.
Moreover, according to the WIPO IP statistics
database, there do not seem to be any patents
filed with the Ministry of Commerce and Industry,
which is the filing office. This is probably due to the
fact that the office has only one patent examiner.
The GCC Patent Office holds 15 patents for Oman,
but its efficiency could be improved, as patents
pending approval typically face delays of up to 4
years. The policy plan under consideration to
remedy this situation is to outsource patent
examination, and the current proposal is to use
patent examiners in Egypt’s Patent Office, though
no decision on this has been reached so far.
There seems to be a larger number of filings of
trademarks and industrial designs, as presented in
table 17. It shows that the vast majority of
trademarks are filed domestically The MOCI
Patent Office awards trademarks typically within
six months of filing. Tables 18 and 19 give an
indication of the classifications, or sources, from
where registrations for trademarks and industrial
design are originating. The tables are not
comprehensive and the classifications listed are
the largest ones, which account for at least two
thirds of all registrations.
There are a number of concerns that may
influence the effectiveness of the courts with
regard to IP cases. As Oman’s legal system has
relatively little experience with IPRs, there may be
concerns about its ability to handle the increasing
Table 17: IP in Oman: Patents, trademarks and industrial design
2000
2001
2002
Total patent applications by applicant's origin
2003
2004
3
Patents in force by applicant's origin
2005
2006
2007
2008
2009
5
3
15
8
3
9
1
1
1
8
21
18
118
1837
2097
1907
5
26
4
10
81
57
110
171
54
5
Total trademark registrations* by filing office
Total trademark registrations* by originƍ
2
2
3
88
3
Total industrial design registrations° by filing office
Total industrial design registrations° by originⁱ
1
Source: WIPO IP Statistics Data Centre.
Note: (*) Direct and via the Madrid system, (ƍ) by applicant's origin, (°) direct and via the Hague system.
2010
Chapter 7: Intellectual property, innovation and diversification
47
Table 18: Registrations of trademarks in Oman, by selected classifications, 2007−2011
Nice Classification*
2007
2008
2009
2010
2011
Class 09
Scientific, nautical, surveying
20
372
393
328
453
Class 05
Pharmaceutical and veterinary preparations
11
255
403
331
403
Class 03
Bleaching preparations and other substances for laundry us
31
297
328
279
338
Class 16
Paper, cardboard and goods made from these materials
17
191
195
137
229
Class 25
Clothing, footwear, headgear
18
273
261
221
227
Class 41
Education; providing of training
16
165
178
124
200
Class 14
Precious metals and their alloys
18
203
191
162
196
Class 07
Machines and machine tools; motors and engines
11
124
163
127
173
Class 30
Coffee, tea, cocoa and artificial coffee
16
175
157
117
156
Class 11
Apparatus for lighting, heating, steam generating, etc.
11
133
131
132
154
Class 01
Chemicals for industry, science, agriculture, etc.
18
91
117
94
131
Class 35
Class 42
Class 12
Class 18
Class 37
Description* / Year
Advertising; business management
Scientific and technological services and research and design
Vehicles
18
18
15
Leather and imitations of leather
Building construction; repair; installation services
14
13
278
280
206
203
140
162
172
190
125
131
235
331
162
201
149
184
133
170
118
147
Source: WIPO IP Statistics Data Centre; available at: http://www.wipo.int/classifications/nivilo/nice/#.
* Note: These descriptions are only for indication; the Nice Classification is considerably more extensive.
From an innovation perspective, the fact that there
is activity in the registration of industrial designs
and trademarks is indicative of a certain level of
awareness of the role and functions of IP.
However, it may also show that while there is
some diversification in the national economy, there
is not sufficient diversification of export-oriented
firms and sectors or in the form of knowledgeintensive industries. Policymakers need to look into
the reasons for the low level of patent registration
on its own and without reference to other IP
instruments. One reason may be that publicly
funded research is not generating patentable
applications. They may need to consider what
kinds of policies are needed to encourage
cooperation between firms and academia in order
to develop research outcomes that are
commercially relevant. From an SME point of view,
it could be that the costs of patenting or registering
utility patents are too high and that additional
funding or fiscal support may be required.
IP is a fundamental issue for technology transfers.
Outside the Ministry of Commerce and Industry,
Sultan Qaboos University runs an Innovation
Affairs Department that focuses on supporting
innovation and is charged with assisting the
development of licensing agreements between
SQU and private companies or publicly-owned
firms that seek to commercialize inventions (box
6). The Innovation Affairs Department is incubating
the Academic Innovation Assistance Program
funded by TRC. The Department has also
established an Innovation and Entrepreneurship
Society to provide guidance and support to
entrepreneurs.
7.5 Traditional knowledge, culture and
genetic resources
The protection of Oman’s culture is an important
step forward for protecting its heritage, establishing
IP awareness and values and spurring innovation.
Oman can draw upon its traditional knowledge and
expressions of its cultural heritage to generate new
ideas for the future. The protection of traditional
knowledge through IP is an important condition for
realizing its innovation potential. The challenge for
Oman is to innovate by drawing on local traditions,
culture and heritage as a source of inspiration and
knowledge for new designs and contemporary
solutions to current problems.
IP policy needs to encourage national custodians,
such as the craft centre project run by the Public
Authority for Crafts Industry (PACI) and the Animal
and Plant Genetic Resource Centre of Oman, to
register their designs and resources with a view to
Table 19: Registrations of industrial design in Oman, by selected classifications, 2009−2011
Locarno Classification*
Description* / Year
Class 10
Clocks and watches and other measuring instruments, etc.
Class 15
Class 03
Class 11
Class 12
2009
2010
2011
66
75
80
Machines, not elsewhere specified
4
18
13
Travel goods, cases, parasols and personal belongings, etc.
2
1
8
Articles of adornment
Means of transport or hoisting
Source: WIPO IP Statistics Data Centre; available at: http://www.wipo.int/classifications/nivilo/ locarno/#.
* Note: These descriptions are only for indication; the Locarno Classification is considerably more extensive.
14
6
20
4
17
7
48
Science, Technology and Innovation Policy Review - Oman
Box 6: Innovation Affairs Department, Sultan Qaboos University
The Innovation Affairs Department (IAD) manages all intellectual property generated by staff and students of SQU. The IAD consists
of three sections:
x Intellectual Property
x Students Initiative Support
x Marketing
The objectives of the IAD are:
x Exploit University-owned intellectual properties in response to the needs of industry, the University, its faculty, and Oman.
x Marketing SQU research to foster relationships with industrial partners that broaden the opportunities for faculty to engage in
sponsored research.
x Manage the IP protection developed by SQU researcher/students by working closely with SQU researchers/students when
preparing to publish or collaborate with other institutes.
x Maintain close relation and continuous interaction with industry and identify opportunities to support industries through research
capabilities.
x Provide the University with thoughtful and up-to-date consulting concerning its IP policies.
x Assist the university to create and develop a research park and the technology incubators.
Source: http://www.squ.edu.om/tabid/11772/language/en-US/Default.aspx.
improving their innovation potential for Oman’s
economic development.
If Oman's innovation policy considers IP to be the
prime mechanism for protecting local traditional
knowledge, culture and genetic resources, it needs
to develop three key mechanisms:
1) Policy initiatives to build broad awareness of
the value of local traditional knowledge,
culture and genetic resources and the need
for their IP protection;
2) Infrastructure, including inventories and
databases, which will require increased
human capacity and financial support in order
for IPRs to provide effective protection; and
3) Practical tools, such as guidelines, protocols
and model contracts and agreements, and
the development of the people’s capabilities
to use them.
IP, innovation, preservation and access
Using IP to protect and regulate the use of
traditional knowledge, cultural expressions and
genetic resources is an essential element in a
national innovation strategy. However, it should be
clear that IP protection is not the same as
preservation and safeguarding, which involve
identification, documentation, popularization and
promotion of cultural heritage. IP aims to conserve
the innovation and commercial potential of
traditional knowledge and cultural expression.
While these two distinct policy actions may be
mutually supportive, they may also be
contradictory, as efforts to preserve and safeguard
traditional knowledge and cultural expression may
result in placing their digital reproductions in the
public domain, where they are unprotected. When
IP enters the public domain, any existing or
potential moral rights are relinquished. This implies
that, while Oman’s culture becomes more
accessible, the risks and vulnerability to uses that
are against the sensibilities of its people will
increase as well.
Such concerns make the case for greater
consideration of the use of open or public licences,
such as general public licences or creative
commons licences, as these allow a detailed
specification of permissions and restrictions, and
do not allow the protected content to be placed in
the public domain (Brown and Crews, 2010). While
many museums have sought to control print and
digitalize reproductions through a usual “all rights
reserved” copyright, arguments citing the fact that
much of the underlying art and artefacts are in the
public domain is changing perceptions and have
led cultural authorities to re-evaluate their IP
policies relating to online images of their
collections.55
IP and genetic resources
Genetic resources as found in nature are not
creations of the human mind, and thus are not
directly protected as IP in most countries. On the
other hand, inventions based on genetic
resources, whether they are related to traditional
knowledge or not, may be protected as IP.
Judgment on this issue can be problematic, as
traditional knowledge will sometimes provide
researchers with indications about their value for
medical or other uses. An added complexity is that
genetic resources are subject to access and
benefit-sharing regulations under the Convention
on Biological Diversity and related protocols and
treaties. 56 The creation of a database on genetic
resources, as is being done at the Animal and
Plant Genetic Resource Centre of Oman, will help
patent examiners identify prior art, enabling them
to dismiss certain patent applications, including
those that do not comply with obligations under the
Convention on Biological Diversity on prior
informed consent, mutually agreed terms, fair and
equitable benefit-sharing, and disclosure of origin.
Chapter 7: Intellectual property, innovation and diversification
7.6 Conclusions and policy recommendations
IPRs are a valuable STI policy tool. However,
focusing policy efforts on facilitating IP registration
processes, while extremely necessary, is an
insufficient condition for enabling the dynamics that
IP can bring to an innovation system and,
ultimately, for building a knowledge-based
innovative economy. An innovative economy will
be achieved only when firms, entrepreneurs,
innovators and researchers have clear incentives
to take risks that are manageable. This is where an
IP system can play a major role, as it protects
them from the unauthorized use of their
technological and knowledge-based solutions in
producing a commercial product or service.
Current IP laws in Oman are generally compliant
with WIPO conventions and obligations under the
WTO TRIPS Agreement. However, this does not
mean that Oman has the capacity to take full
advantage of its domestic innovation potential; nor
should the development of an IP framework in
Oman be considered a done job. For example,
building greater awareness about the system of
utility patents can encourage incremental
innovation. Such a system is already incorporated
into the Law on Industrial Property Rights, but it
could be refined in order to provide incentives for
domestic inventors to lay a claim to such rights.
A number of research and innovation areas of
strategic interest have been identified, where IP
must play a paramount role. One of these is the
Animal and Plant Genetic Resource Centre of
Oman. Innovative uses of genetic material in
advanced agriculture, industry and pharmaceutical
development require a fully functional IP
framework. However, such endeavours also
present a challenge to IP policy, as outcomes with
commercial potential can result from a mix of
traditional knowledge and research-driven efforts.
The database of the Genetic Resource Centre, as
its central policy tool, itself can test IP policy. As a
digital database, it can be easily shared and
copied, as its role is to serve as a tool for
knowledge and information-sharing among STI
stakeholders. This suggests a certain level of
openness, but it also means that policies are
needed to protect its contents from unwarranted
appropriation.
More generally, with regard to research and in
particular to education issues, Oman’s IPR policy
needs to consider an overall strategic position on
open access to ensure that publicly funded
research outcomes, when published, are
distributed as openly licensed materials. This is an
important consideration that determines the
public’s right to reuse nationally funded knowledge
development, in particular if research is conducted
with publicly funded grants.
49
Application, filing and maintenance of patents, in
particular if a patentee seeks international
protection, is a costly endeavour unattainable by
the majority of SMEs striving to develop IP on
their own. Solutions to this problem range from
developing
joint filings with
other
STI
stakeholders, providing financial support directly
or through a tax policy and encouraging the
broader use of national-only utility models.
All economies need to balance the intensity of
competition in their internal markets with their IP
strategies, since by definition the granting of IP
protection results in a temporary restriction on
competition. Unfortunately, in Oman the policy
discussion so far has been largely focused on the
international competitiveness of the national
economy as a whole.
While this is a paramount consideration and is a
framework condition for developing a national
innovation system, it falls short of considering the
competitiveness of internal markets and, from an
IP strategy perspective, developing the capacity
to address cases where there exists an abuse of
an exclusive IPR.
The Consumer Protection Law (Royal Decree
81/02) requires the Government to curtail
monopolies or over-dominant firms in the market,
but it does not specify what action must be taken.
Although there is no separate competition
authority in Oman, the Law is implemented by the
Ministry of Commerce and Industry, which is also
the IP authority in Oman. This may present a
conflict of interest and may impede an open
policy debate in situations where the interests of
IPR holders conflict with having competitive
domestic markets that are in the public interest.
In conclusion, the challenge to developing
Oman’s innovation system has an important and
strategic IP component. Part of this is a result of
conditions specific to Oman, where its high per
capita GDP, relatively rich natural resources and
well-developed oil industry require matching
investments in the creation of knowledge- and
technology-based
growth
and
economic
diversification. Such developments and ambitions
require a profound understanding of IP issues
beyond the immediate legal technicalities.
This is in addition to challenges posed by global
phenomena such as the revolution in information
technology and the worldwide spread of
Internet-based
technologies
and
content.
Breakthroughs in fields such as biotechnology,
life sciences and genetics raise humanistic and
ethical concerns. The objective to preserve,
enable access to and commercially exploit
traditional knowledge, expressions and natural
and genetic resources can involve conflicting
issues that need to be resolved.
50
Science, Technology and Innovation Policy Review - Oman
Development objectives require that the benefits of
IP should accrue to society as a whole, not only to
IP owners, and that IP be considered beyond
industrial property issues to also take into account
its role in health and education. The linkages
between IP, invention and innovation and
economic growth through diversification require
proactive policy support, best assured through an
innovation system framework. This includes
support for funding IP registration and
maintenance, financially or by developing
cooperative frameworks and supportive regulations
and guidelines that allow the pooling of resources
for joint registration. Finally, IP has become an
essential part of today’s globalized economy in
which national and regional IP systems are
becoming
increasingly
connected.
Such
considerations underscore the need for a strategic
approach to IP with clear objectives and in concert
with the highest levels of national development
policymaking.
8. An economic diversification and
innovation strategy
8.1 Introduction
Economic development is fundamentally a
process of structural transformation where
countries innovate and diversify, from producing
basic goods to increasingly higher value added
and sophisticated industrial products and
services. While domestic markets have a role in
stimulating demand for such a transformation, for
small countries like Oman, exporting and
participating in global value chains are critical
factors. Given the large export earnings
generated by the oil industry, reducing its
significance and diversifying the economy cannot
be based on domestic demand alone; it will
require the development of export-oriented
sectors and industries as well. Central to Oman’s
diversification efforts is the Vision 2020 strategy
outlining objectives to be achieved by the year
2020, and setting direction for industrial
development, tourism and the services sector,
among others.
Diversification through investments in innovation
can be an important growth factor for Oman’s
economy, eventually resulting in the emergence of
sectors and industries that could succeed the oil
sector. However, innovation is an uncertain
process, and where it succeeds in creating a new
firm, the risk-taking entrepreneur will not be able to
appropriate all the gains, as competitors will
quickly emerge. Intellectual property, once
understood in the context of the complexity of
policy actions and linkages that develop into an
innovation system, is an important tool in reducing
and managing entrepreneurial and investment risk
and uncertainty. However, when an innovation
fails, the losses are fully appropriated by the
original innovator.
This unbalanced and asymmetric condition is a
known cause of underinvestment in innovation,
and is a factor that hampers diversification.
Therefore, a coherent national innovation strategy
that builds innovation capabilities and provides
incentives to economic actors to invest in
innovation can also be a powerful enabler of
diversification through industrial growth and
structural transformation.
8.2 Progress in diversification
In terms of GDP growth and diversification, Oman
has made considerable progress since the early
1970s, and the overall outlook appears robust. To
reduce Oman’s dependence on oil, 35 years ago
the Government established a series of five-year
development plans to encourage industrial
diversification. Today, approximately 59 per cent of
Oman’s GDP is generated outside the oil and gas
sector compared with 33 per cent in 1975, when
the first five-year development plan was
implemented (Ernst & Young, 2011). The Vision
2020 strategy has set a rather ambitious target to
increase the share of the non-oil sectors to 81 per
cent of GDP by 2020. However, as this share has
been steadily declining over the past decade, it is
unlikely that this target will be reached by 2020.
The share of manufacturing in GDP nearly doubled
between 1996 and 2010, but most of it can be
attributed to downstream petroleum activities
(Mansour, 2013).
Oman’s economy and export sector remain
relatively undiversified, as indicated by its export
diversification index, 57 compared with some other
GCC countries and other selected developing and
developed countries and regions (table 20). An
index of zero is the fully diversified world index,
while an index of 1 indicates a highly undiversified
economy. Since 1995, Oman has managed to, on
average, reduce its index and increase the
diversity of its exports by approximately 0.005
points per year, giving it an index of 0.67 in 2012 –
lower than Saudi Arabia, but higher than the GCC
average. While this increase in export
diversification is evidence of progress, it is
insufficient to meet the strategic goal of reducing
the importance of the oil sector.
It is inevitable that Oman’s oil reserves will
eventually be exhausted, or become economically
unviable, at some time in the future, and this
provides a major reason for urgent policy action.
Moreover, in the short and medium term, its
overdependence on oil exports and revenues
makes it vulnerable to unstable global demand and
prices, which may put at risk Oman’s development
goals. Chart 8 presents a historic overview of oil
price volatility, some of which may be due to
Chapter 8: An economic diversification and innovation strategy
51
Table 20: Concentration and diversification indices of merchandise exports,
Oman and selected developed and developing economies and regions, 2002–2012
ECONOMY / YEAR
Saudi Arabia
Major petroleum and gas exporters: Developing econ.
Oman
GCC (Gulf Cooperation Council)
Jordan
ANCOM (Andean Community)
Egypt
Turkey
ASEAN (Association of South-East Asian Nations)
EU27 (European Union)
NAFTA (North American Free Trade Agreement)
Developing economies
World
2002
0.82
0.75
0.74
0.72
0.62
0.63
0.64
0.55
0.38
0.16
0.19
0.26
0.00
2003
0.83
0.76
0.77
0.72
0.59
0.64
0.63
0.54
0.37
0.18
0.18
0.27
0.00
2004
0.79
0.74
0.77
0.70
0.59
0.63
0.62
0.51
0.37
0.18
0.18
0.26
0.00
2005
0.81
0.73
0.77
0.70
0.59
0.61
0.61
0.53
0.35
0.19
0.19
0.25
0.00
2006
0.79
0.74
0.77
0.70
0.65
0.61
0.60
0.47
0.34
0.19
0.19
0.24
0.00
2007
0.78
0.72
0.74
0.69
0.58
0.60
0.59
0.46
0.34
0.20
0.20
0.24
0.00
2008
0.77
0.70
0.72
0.66
0.61
0.58
0.54
0.47
0.34
0.21
0.20
0.23
0.00
2009
0.77
0.69
0.70
0.64
0.59
0.61
0.55
0.51
0.34
0.22
0.19
0.23
0.00
2010
0.76
0.70
0.71
0.66
0.64
0.62
0.57
0.46
0.33
0.22
0.20
0.21
0.00
2011
0.76
0.67
0.70
0.64
0.65
0.62
0.55
0.48
0.32
0.22
0.20
0.20
0.00
2012
0.75
0.67
0.67
0.64
0.62
0.61
0.54
0.44
0.31
0.23
0.20
0.20
0.00
Source: UNCTAD, UNCTADstat.
uncertain and unpredictable socio-historic events
that are not directly related to economic
fundamentals or speculative market volatility.
An equally critical problem is related to the
profitability of Oman’s non-oil industries and
sectors. At current oil prices, extraction is profitable
and produces significant earnings which can
finance Oman’s infrastructure development and
public spending. Today, the development of new
sectors and industries does not replace the oil
industry, but adds to it and to the economy.
Moreover, infrastructure development and public
spending on education, health and social welfare
are not under threat. However, at some point, oil
production or oil prices may decline, and revenues
and earnings from this sector will need to be
replaced by non-oil sectors. While actual revenues
from non-oil sectors may be comparable, taxable
earnings cannot be expected to match those
generated through oil exploitation at current prices.
The International Energy Agency (2008) estimates
that conventional oilfields have production costs of
between $6 and $28 per barrel, while enhanced oil
recovery production costs are significantly higher
and more variable, in the range of $30−$80 per
barrel.
The key issue is that public spending in Oman
relies critically on oil revenue, and the true gauge
of feasibility is the so-called fiscal break-even oil
price below which public services start to suffer. In
a recent report published by Moody’s investor
services, Oman’s fiscal break-even oil price was
estimated to be among the highest in the GCC, at
around $104 per barrel, having shown a very
strong increase of $80 since 2003. 58 While
extraction and oil recovery technologies have been
improving, historical periods of barely costeffective oil production are still quite recent, and oil
Chart 16: Crude oil prices since 1861 ($ per barrel)
Source:
BP Statistical Review of World Energy 2013 (see: http://www.bp.com/en/global/corporate/about-bp/statisticalreview-of-world-energy-2013.html).
52
Science, Technology and Innovation Policy Review - Oman
exporters and their organizations have been
constantly concerned about keeping oil prices
profitable.
8.3 Strategic issues and diversification
Given the important concerns about Oman’s
overdependence on oil and gas revenues,
policymakers have agreed on the necessity of
diversifying the national economy. A number of
economic sectors have already shown some
promise and will be noted in the discussion that
follows.
The role of SMEs and FDI in innovation
and diversification
Productive diversification will require a balanced
development of large and smaller enterprises. For
it to be viable, diversification implies a process of
industrialization at a scale that enables competitive
exports. The larger enterprises and their sectors
should be linked to a strengthened SME sector in
more labour-intensive activities that can generate
much-needed new jobs. In this regard, the role of
SMEs in the diversification process has been
recognized, in particular after the SME
Development Symposium held in Bahla in January
2013. Following the Symposium, Royal Directives
were issued and policymakers, with the Ministry of
Commerce and Industry at the helm, have been
charged with developing regulations and
supporting polices for SME development.
The phenomenon of hidden trade and fictitious
companies, whereby firms conduct operations that
are not listed in their commercial records, or firms
that are registered as Omani-owned but are
actually owned and managed by expatriates, is a
major concern and disincentive to innovation and
competitiveness, in particular among SMEs. A
more effective implementation of commercial
regulations needs to be followed through with
research on the role of Omanis in owning and
operating existing SMEs in each sector and how
this links up with human capacity-building, as
discussed in section 7. It is also important to
explore the current profile of Oman’s SMEs in
terms of their sectors, the markets they address
and the demographics of these markets, and the
level and potential for diversification or
specialization.
A diversification strategy needs to be fully matched
to a human capacity-building strategy. To achieve
clarity of policy action, Oman needs to identify its
competitive sectors and industries bearing in mind
that labour is a major contributor to their success.
It is therefore no surprise that national labour
market policies and their relation to the
Omanization policy are issues where consensus is
weakest. During UNCTAD’s mission in May 2013,
it was often heard that educated and trained
Omanis did not meet the requirements of industry.
Another potential source of diversification is FDI,
which can play a multifaceted role, particularly in
the technology transfer required to spur innovation
and diversification. In addition to providing
technology, capital and employment and involving
local partners in established international value
chains, FDI can be a vehicle of knowledge
transfer, including for many soft technologies, such
as managerial skills, marketing, and knowledge of
standards and regulations in export markets. The
overall effect of FDI will, however, depend on the
absorptive capacities of Oman’s firms, and the
ability of its innovation system to establish and
support the required linkages between investors,
SMEs and STI stakeholders in general.
However, there should be no doubt that the
commercial interests of foreign investors may not
coincide with a host country’s development
objectives, in particular in terms of technology
transfer or diversification. Indeed, among the many
reasons that lead international companies to
favour an FDI strategy, over licensing production
from existing facilities in the host country, is that
they can reduce or limit technology transfer and
knowledge spillovers. However, the host country is
responsible for creating conditions that enable it to
compete with, partner with or complement FDI,
including
developing
the
competitiveness,
productivity and absorptive capacity of its domestic
firms and sectors. For example, if human capital in
the host country is lacking, investors may not
engage in hiring locally or partnering with local
firms and trade prospects may suffer, thereby
reducing opportunities for diversification.
Policymakers may choose to implement local
content requirements tied to technology transfer by
foreign investors, such as obliging them to use
local technology suppliers and scientific staff, and
cooperating with public research institutions. The
question is, do such measures provide incentives
for local technology stakeholders to advance their
knowledge and absorptive capacities, or do foreign
investors treat this issue as a tax or tariff and seek
to ensure minimum formal compliance, but no
more? Such polices need to be based on empirical
evidence generated through transparent and
unbiased surveys and research to assess whether
there is a positive experience with technology
transfer for the technology and sector under
review.
Diversification for export and proactive
industrial policies
It is worth considering the relationship between
innovation in a purely domestic context and
innovation in an export diversification strategy.
Countries seeking to diversify domestically can aim
Chapter 8: An economic diversification and innovation strategy
to support innovation in the broadest sense, that is,
supporting the introduction of products or
processes that are new to the specific market or to
the firm, rather than only those that are absolute
novelties for the world. However, given Oman’s
critical need for export diversification and its
relatively high GDP per capita, it should give
stronger consideration to innovation that takes the
form of products or processes that incorporate a
higher content of new-to-the-world knowledge.
This has strategic implications for its innovation
system and the strength of the policy support it
receives. Assuming the need for export
diversification,
linkages
that
support
the
commercialization of new knowledge become a
much greater concern.
This necessarily points to the need for a significant
increase in investment in capacity-building for
generating new scientific knowledge and
technological inventions. In addition to increasing
investments, strategic intelligence capabilities,
which are currently extremely scarce in the
country, need to be developed in order to identify
key strengths in the scientific and technological
establishment and knowledge-based diversification
opportunities. The requirement of stronger
innovativeness for export diversification also
means that cooperation among private sector and
academic research institutions must receive
support from the highest levels, so that such
knowledge and inventions can be effectively
commercialized. IP policies must bolster the
development of patentable outcomes while
creating public awareness that trademarks and
industrial design − which represent the bulk of
Oman’s IP − while important in themselves, can
also help in the export diversification process,
though to a lesser degree.
Diversification and regional and industrial sector
development are overlapping policy issues, and
they also touch other policy domains, including
human resources and fundamental innovation
policy concerns, such as the need to create
clusters and centres of excellence or to avoid
creating pockets of underdevelopment. Finding a
policy balance between such demands is crucial,
and the above-mentioned strategic concerns about
the roles of SMEs and FDI are key considerations.
A central question for Oman’s policymakers is
whether it is wise and opportune to proactively
support certain industrial sectors without
abandoning broader diversification policies. This is
a key policy concern, and evidence from
developed economies indicates that, beyond a
certain threshold of income and absorptive
capacity
for
technology
and
knowledge,
specialization in several select sectors is a viable
strategy. While Oman may not be in such a
position today, it is not far from this point and
policymakers need to plan ahead. Given the high
53
level of uncertainty in strategies that require
picking industry winners, and the early
development stage of its innovation system,
including the structures that should perform its
strategic intelligence functions, it will be necessary
to nurture suitable public-private partnerships and
a stronger network of innovation linkages to
provide the fundamental conditions for the
emergence a wide range of economic activities
that demonstrate potential for innovative
diversification.
8.4 Sectors with diversification potential
A limited number of economic sectors will be noted
and possible linkages among them will be
described. These are not suggestions for policy;
they are simply intended to illustrate that
the country’s innovation and diversification
potential can be enlarged through cross-sector
linkages
aimed
at
creating
commercial
and technological synergies.
When considering the extractive industries, it is
important not to overestimate their potential. These
industries
generally
have
underdeveloped
innovative linkages with the rest of the economy in
the locations where they operate. While their
potential to generate innovative diversification
should not be overstated, some leverage could be
obtained by developing linkages between them
and large infrastructure construction projects in
Oman and regionally in the GCC.
The oil sector and diversification
While development goals require diversification
away from the oil industry, the significance of the
sector for the economy of Oman requires
consideration of its role and contribution within a
nascent and developing national innovation
system. A starting point is recognizing that
reserves are smaller and the complexity of oil
exploitation in Oman is greater than in other GCC
countries. Therefore, innovation has become
critically important for PDO, which has developed
enhanced oil recovery (EOR) technologies to
extend the life and productivity of active oil fields.
Annual capital expenditure amounts to about $5
billion, some of which is for R&D. PDO has a large
number of active research projects and technology
trials, and is continuously evaluating the latest
R&D outcomes and technologies globally. Having
amassed research and practical experience in
EOR, PDO receives regular invitations for
international collaboration.
To maintain its research and innovation activities,
PDO has a large human resources development
programme that includes scholarships for several
hundred staff. Half of all senior well engineers
employed are trained by the company, and it has
invested in upgrading human capacities that are
54
Science, Technology and Innovation Policy Review - Oman
relevant for both college graduates and school
leavers. PDO has been cooperating with SQU for a
number of years, funding research and state-ofthe-art laboratory facilities. However, until recently,
not much of research resulted in practical
applications due to the lack of focus on industry
needs; instead priority was given to publishing in
scientific journals. Missed opportunities have
stemmed partly from a fragmented research
agenda developed with insufficient inputs and
cooperation, in spite of regular events such as the
annual PDO-SQU souk. On the other hand, SQU
has world class laboratory facilities for oil
technology development.
Cooperation with local firms is clustered under a socalled in-country value programme designed to
strengthen PDO’s interaction with the local and
national business community (see box 7). However,
there are a number of problems that are indicative
of potential barriers to innovation and diversification.
Of the 200 local firms conducting business with
PDO, many are just fronts for foreign companies,
with questionable local content. The solution is to
increase the competitiveness of local firms through
technological advance and innovation, and by
developing a certain level of specialization.
One opportunity, discussed earlier in this review, is
that of water management and treatment, as oil
exploitation requires the production and use of
large quantities of water (see section 9, box 10 on
the Nimr Reed Beds). More generally, a
diversification policy should consider using the oil
sector to leverage competitive advantages by
having it support the development of several
nascent sectors such as tourism, ports and
transport and logistics.
Natural gas
Even though natural gas exploitation is similar to
that of oil, its contribution to diversification should
not be overlooked. Its use in power generation
provides a base infrastructure for diversification
and innovation in other sectors. Natural gas
reserves are estimated to be about 800 km³. 59
However, Oman requires increasing natural gas
supplies to meet the growth of its domestic
consumption as well as its enhanced oil recovery
projects and contractual obligations of its liquefied
natural gas (LNG) exports. Gas is a major source
of fuel for power stations and for desalination.
Oman LNG, the national gas company, supplies
nearly all of Oman’s natural gas requirements.
Box 7: PDO In-Country Value activities
In-Country Value (ICV) is defined as the total spend that is retained in-country that can benefit business development, contribute to
human capability development and stimulate productivity in the Omani economy. PDO, recognizing that ICV is “good business”, has
issued an ICV policy in January 2012, which establishes four pillars:
• In-Country Manufacturing and Services Provision;
• Omanization/Job Creation/Training;
• Social Investment; and
• Local Community Contracting/SME Development.
In 2013, PDO awarded contracts worth more than $3.1 billion to locally registered companies, and broadened its support of domestic
businesses through a variety of tactics, including technical assistance, ring fencing the supply of locally manufactured goods, the
establishment of Omani repair facilities and in-country engineering services. In addition, PDO and it contractors created more than
10,000 training and employment opportunities for Omanis across its contractor workforce since His Majesty’s National Objectives
Programme was launched in 2011. A scheme to produce a pool of 400 skilled welders, training them to the highest international level
to work on the company’s three mega projects, was launched in 2014.
To further increase the capacity and capability of local community businesses, PDO has established four Super Local Community
Contractors (SLCCs). These Omani businesses, which collectively have in excess of 6,000 shareholders, are all from within PDO’s
concession area. A total of 460 Omanis were newly employed by SLCCs up to the end of 2013 with 200 trained. Contracts worth
$540 million were awarded. The SLCC concept is being replicated locally in other sectors and also seriously being considered
regionally. Many SMEs, or Local Community Contractors (LCCs), are increasingly carrying out work scopes which were one day
limited to international contractors, while the larger SLCCs have started tendering for contracts outside Oman.
The ongoing efforts to drive ICV culminated in a major industry ICV business opportunity conference in December 2013 in which the
Omani’s Oil & Gas ICV Blueprint Strategy was unveiled. Details of the ICV opportunities identified between now and 2020 were
presented in the three key areas: in-country manufacturing, in-country services provision and the development of a skilled Omani
workforce. The strategy analysis has identified the potential for the creation of a market for $64 billion in goods and services and
50,000 skilled jobs for the Sultanate up to 2020.
The Oman ICV approach is based on the active collaboration of the Government and Private sector. However, there is no ICV
legislation in Oman and all achievements have been made through the collaborative effort of private and public enterprises. The
international NOCs and Governments Local Content Conference held in London in October 2013 and leading local content thinkers
view Oman’s approach as best-in-class. Other Government sectors in Oman are now looking at adopting it across their business
portfolio.
Source: PDO.
Chapter 8: An economic diversification and innovation strategy
Since 2007, there have been discussions on a
project to build a gas pipeline from gas sources in
the Islamic Republic of Iran across the Strait of
Hormuz to Oman. Given recent progress in United
States-Iran relations, there is an increasing
likelihood that this project will eventually take off. It
is also an indication of the political sensitivities
involved in exploiting hydrocarbon resources, and
another reason why development policy needs to
diversify and innovate to reduce vulnerability to
geopolitical tensions. The proposed project would
be worth $60 billion and would take the form of a
25-year supply deal. Oman plans to use some 15
billion m3 of gas imports for domestic purposes and
process the remainder for export from its
LNG terminals.60
Downstream hydrocarbon industry
The downstream hydrocarbon industry started
some 20 years ago with the operation of the
ORPIC refinery, built to produce motor fuel. A
polypropylene plant opened in 2006, using
feedstock from the refinery, and an aromatics plant
started operation in 2009 in Sohar. All aromatics
and polypropylene feed are exported, as well as
about 50 per cent of other base chemicals for
plastics, benzene and pyroxene. Motor fuel is sold
locally to Oman Oil, Almaha and Shell, while the
primary trading entity, OTI (London), markets
aromatics and polypropylene feed internationally.
For the time being polypropylene feed has a
limited domestic market until methanol and PET
plants are constructed.
There is innovation potential in transforming oil into
a hydrocarbon industry and expanding services
maintenance and repair activities. Similar to PDO
activities, in-country value programmes should aim
to develop linkages with other domestic activities
to improve employment and foster the
development of the local business community (see
box 7 above). However, in-country value
programmes outside the main oil exploitation
industry require a critical mass of interactions.
While Oman is growing fast, without the oil sector it
is still a small economy.
There are a number of intersectoral issues related
to downstream hydrocarbons that can be
addressed through a dedicated innovation system
approach. In the education sector, in particular, as
noted earlier, primary and secondary education still
needs to be reformed, though there has been
some progress in tertiary education. However,
engineering curricula do not focus sufficiently on
developing practical competencies needed for
graduates to start working productively, even if
theoretical competencies and course contents are
adequate. In particular, broader communication
and leadership skills need to be developed. ORPIC
should be able to influence academic curricula so
that universities produce graduates with the
55
competencies required by firms such as ORPIC.
So far, firms in Oman and in the entire GCC region
continue to depend on hiring expatriates, and
compete for available talent in downstream
hydrocarbon engineering. The incentive to train
Omanis is therefore strong as they are less likely
to leave to work abroad than expatriates, but more
coordination is needed. For technical staff at lower
levels, a real concern is their lack of fluency
in English.
Regarding research and innovation, greater
cooperation is needed with Oman’s academic
institutions. ORPIC already has representatives on
the board of Caledonian University, and it has
collaborated with SQU on reverse osmosis water
treatment. The main obstacles to deeper
cooperation are mainly related to insufficient
capacity for advanced research and the lack of
alignment of R&D to potential commercially viable
products. ORPIC itself does not conduct R&D, and
relies entirely on licensing technologies as needed.
Finally, while policymakers need to appreciate the
innovation potential of the oil and gas sector and
should work on developing the necessary means
of realizing that potential, they cannot expect to
achieve much employment creation from these
efforts, as it is a capital-intensive sector and does
not create many jobs.
Non-oil resources
The Sohar Aluminium smelting project was
completed in June 2008 and produced its first
ingots and sows. The project included the
construction of a carbon plant, a metal casting
facility, and port facilities for storage and shipping.
Oman does not have a source of bauxite ore, but
based on the experience of Dubai in the United
Arab Emirates, it believed it had sufficient
competitive advantages in energy and ports and
logistics to be able to enter the sector. The
Omanization policy was incorporated in the project
from the outset with the creation of facilities to train
local workers. In addition a summer students’
programme is held every year for two months to
give senior students and recent graduates practical
experience in a professional working environment
to supplement their academic knowledge. In order
to improve downstream linkages and enable the
production of higher value added manufactures,
200 hectares of land adjacent to the smelter in the
Sohar Industrial Estate have been reserved for
related industries, along with a commitment to
reserve up to 60 per cent of the annual production
capacity for local downstream manufacturing of
aluminium products.
Copper mining and processing operations are
located to the north of Sohar in the Al Batinah
region (near the border with the United Arab
Emirates). To date, mining operations have
produced over 2.5 million metric tons of copper.
56
Science, Technology and Innovation Policy Review - Oman
While the Sohar and Lasail mines were
exhausted in the 1990s, the Ministry of Petroleum
and Minerals has reported proven copper
reserves of 8 million tons and proven chromite
ore reserves of 1.6 million tons. At the Shinas
mine, located 80km north of Sohar, over 1 million
metric tons of copper have been mined since
operations started in 2008; outstanding reserves
still to be mined at the current pit are estimated to
be about half a million metric tons. Recent
exploration at Shinas has found a potential
increase in reserves, which could result in a
possible expansion of the pit. A feasibility study
for the Safwa mine and the Mandoos mine
projects was completed in late 2009, and relevant
approvals from the Oman Authorities are awaited
before exploitation can begin. Apart from these
activities, at least five other locations for copper
ore mining are undergoing feasibility study or are
in the planning stage
The Lasail Copper Concentrator near Sohar has
a throughput of 130 tons per hour, and is
designed to upgrade the mined copper ore from
2−3 per cent to 18−24 per cent. The copper
concentrate is sold for further processing for
export or to Oman Mining Company which
operates the Lasail smelter and refinery complex
adjacent to the concentrator. The concentrator is
equipped with a water recovery system compliant
with national environmental legislation. The Lasail
Concentrator laboratories are certified and
internationally accepted for sample preparation
and geochemical analysis.
While copper is used mainly for electrical cabling,
there are many secondary uses of potentially
better value for Oman’s diversification strategy.
For example, it is used extensively in architecture
and construction due to its anticorrosive qualities.
Moreover, since it is biostatic and bacteria will not
grow on it, it can be used as an antimicrobial
material with public health benefits, 61 as well as
for possible use for nets in aquaculture to solve
the problem of biofouling. This is a process that
begins when algae spores, marine invertebrate
larvae and other organic material adhere to
aquaculture nets and encourage the attachment
of secondary colonizers, leading eventually to a
situation where fish stock acquire diseases and
require treatment with antibiotics, with the overall
effect of reducing yields. Copper aquaculture
nets, on the other hand can remain without
fouling for months. 62 This is an example of a
particular cross-sectoral issue worth examining,
given
Oman’s
objectives
of
promoting
aquaculture and fisheries.
The production of non-metallic minerals increased
sevenfold between 1996 and 2008. There are as
many as 150 active quarrying and mining
operations, including for chromite, marble,
sandstone, gypsum, laterite, clay, limestone, salt,
and dune sand. Steel grade limestone is exported
from south Oman to India. Large reserves of
gypsum (165 million tons) have been surveyed in
the Shuwaymiya area, and mining them is
commercially viable. Other non-metallic minerals
available for mining are: dolomite, silica
sand/quartzite, various clays (including kaolin and
attapulgite), marble, aggregate and armour rocks
(construction materials), as well as low-grade iron
ore (laterite).
Increased exploitation will require further
investment in the development of mineral-based
industries in Oman. Export markets are of major
importance for developing non-metallic mineral
industries. Investment in construction in the GCC
has resulted in the export of 60 per cent of
construction materials, 70 per cent of marble, 43
per cent of laterite (clay for bricks, roads and
water supplies), 21 per cent of gypsum and 10
per cent of limestone.
Surveys have revealed important deposits of
silica sand and quartzite in the north, south and
central regions of Oman. These minerals are
used in glass manufacturing and ceramics. While
these materials can be exported in bulk from
coastal ports, it would be opportune to consider
moving up the value chain, in particular as Oman
may have some competitive advantage due to
lower energy costs. However, countries that
import these raw materials or low value added
products have an advantage of larger markets
and scale. A number of foreign firms, such as
Rauch of Austria and Tata Iron and Steel Co.
(TISCO) of India, have expressed an interest in
non-metallic mining and in the export of raw
materials from Oman.
Information and communications
technologies
ICT is often cited as a core sector for
technological innovation. While the effects of ICT
on firms, governance and households are
important, these technologies have not had much
of an impact in Oman, and therefore it is
unrealistic to expect that a local ICT services
market could improve diversification and
innovation prospects. Table 21 compares
computer use and Internet access − two core ICT
indicators − in Oman, the GCC and a number of
other countries.
On the other hand, Oman’s geographical location,
good security and the fact that it is not in a
natural disaster prone area give it a competitive
advantage in developing Internet backbone
services.
There
have
been
significant
investments in an overland cable to Europe and
an underwater cable to Malaysia and Singapore,
as the national operator, Omantel, has plans to
become a global network operator.
Chapter 8: An economic diversification and innovation strategy
57
Table 21: ITU Core indicators on access to, and use of, ICT by households and individuals
Bahrain
United Arab Emirates
Qatar
Kuwait
Saudi Arabia
Oman
France
United States
Malaysia
Turkey
Azerbaijan
Egypt
South Africa
Thailand
Computer
92.7
85.2
91.5
69.0
57.3
58.0
81.0
75.6
66.9
50.2
45.0
37.9
21.5
26.9
Percentage of households with
data year
Internet access
2012
79.0
2012
72.0
2012
88.1
2011
57.7
2010
54.4
2011
46.0*
2012
80.0
2011
71.7
2012
64.7
2012
47.2
2012
46.8
2012
32.3
2011
23.2
2012
18.4
data year
2012
2012
2012
2011
2010
2012
2012
2011
2012
2012
2012
2012
2011
2012
Source: ITU1; TRA Annual Report 2012 (2013)
* Note: Figure for 2012 is an estimate assuming 7% growth for 2011 to 2012.
Local and regional innovation opportunities lie with
content and products that are not truly global. ICT
tools and applications aimed at tackling
environmental, pollution and educational problems
and for safety training in industry are possible
areas that deserve to be explored. However, there
are difficulties in competing with Egyptian and
Saudi content development, as Oman’s productive
and export capacities are underdeveloped and
Omanization (including raising of the minimum
wage) is seen as working against export
competitiveness. Egypt, with its very liberal labour
laws, was cited as a positive example. Also, it was
observed that exporters from other countries
benefit from various forms of government support,
particularly when bidding for international
contracts. A number of local issues were also
pointed out, such as delays in the project involving
cabling of the urban fibre network through sewage
channels in Muscat, which would benefit from
better coordination among stakeholders. Currently,
infrastructure sharing arrangements are not ready,
but when the urban fibre network becomes
operational, commercial arrangements for its use
will have to be worked out. This is an obvious
issue that could benefit from improved coordination
within an innovation system framework. The latest
effort in broadband infrastructure development is
the establishment of a local entity to implement the
Fiber to the Home Project.
Regarding university capacity to produce
competent ICT engineers, Omantel has indicated
that its skill requirements are not matched by
graduates, as academics and firms do not have a
common perspective on training and competencybuilding or on research goals. Greater crossfertilization of ideas, skills and interdisciplinary
cooperation would be a positive step. Omani ICT
firms may be hesitant to invest in training as they
fear that, after receiving training, staff will look for
better paid jobs elsewhere. Reducing attrition rates
is a complex issue and can be partially resolved by
providing on-boarding activities including soft skills
training and specific job-related skills training. The
ITA is working on bridging this market gap by
supporting a number of initiatives such as the SAS
Virtual Reality Centre, the SAS Mobile Applications
Centre, community knowledge centres (CKCs) and
women community knowledge centres (WCKCs).
Agriculture and fisheries
The agriculture and fisheries sector accounts for
only 1.2 per cent of Oman’s GDP, projected to rise
to 3 per cent of GDP, and it engages 5.2 per cent
of the economically active population, mainly in
smallholder or subsistence farming. Fuel and
energy are major inputs in agriculture, and
therefore some linkage to the performance of the
oil sector is unavoidable.
Oman is a net food importer, importing $2.5 billion
worth of food annually, while exporting only about
$1 billion worth. Agriculture and fisheries, while
growing in absolute terms and in productivity, have
been steadily declining in relative importance for
the economy since the start of oil exploitation in
the late 1960s. The total area under cultivation is
estimated to be about 18,000 km2, or 6 per cent of
the total land area. The principal agricultural
product is the date, with almost 300,000 metric
tons produced in 2010. Other products include
bananas, mangoes, coconuts, limes, alfalfa,
tomatoes, cabbages, eggplants, okra and
cucumbers. Frankincense is traditionally produced
from trees growing wild in Dhofar. Along the Al
Batinah coast (in the north-east), wheat and
sorghum are grown in addition to fruit. Alfalfa and
sorghum are used primarily as cattle feed.
Several observers commented to the UNCTAD
mission in December 2013 that agriculture may not
be a suitable sector for technological innovation
and economic diversification. However, this is not
in accord with the expressed strategic aims of the
Ministry of Agriculture and Fisheries, which cited a
number of examples of successful agricultural
firms that have opted for greenfield projects
involving industrial and technologically advanced
operations, rather than for up-scaling of existing
smallholder farming. It was further suggested that
58
Science, Technology and Innovation Policy Review - Oman
Box 8: A strategic plan for fisheries
A strategic plan to develop fisheries sector has been approved and blessed by His Majesty Sultan Qaboos bin Said at a Shura
Council session on 31 December 2013. Together with the Ministry of Agriculture and Fisheries, a number of institutions are involved
in the follow-up strategizing, including the World Bank and FAO. Key objectives include sustainable development and enhanced while
equally important would be the reform impact on economic diversification, food security, job opportunities and social stability. The
number of Omani licensed fishermen was 43,000, and more than 2,700 labourers were involved in fish transport and 2500 at the fish
installations, according to the agricultural census of 2012/2013.
HE Dr Fuad bin Ja’afar Al Sajwani, Minister of Agriculture and Fisheries, discussed a number of related themes during the Shura
Council including the need to develop infrastructure to promote agricultural and fisheries development as well as a Strategic Plan to
Develop Fisheries Sector for the period 2013-2020. Fish farming was another agenda issue as well as policies to regulate fish
marketing. In discussion, the Shura Council members raised queries on various issues and topics, including rapid establishment of
central and advanced fish markets in various provinces, the importance of marketing fish products, as well as regulating the export of
fish to ensure self-sufficiency in Omani market.
Source: FAO, http://neareast.fao.org/Pages/NewsDetails.aspx?lang=EN&I=0&DId=0&CId=0&CMSId=21&id=2407194.
agricultural investment should not only have a
financial outcome but also a positive social impact.
In particular, fisheries are believed to have the
potential to make a strong contribution to the
economy. Currently, traditional boats are used for
98 per cent of the catch, but on 31 December
2013, a strategic plan to develop the fisheries
sector was approved and blessed by His Majesty
Sultan Qaboos bin Said, and a major investment of
OMR 700 million is expected to be made available
for modernization of the sector (see box 8).
An interesting example of technology-led
agriculture is that of A’Saffa Foods, a company
which produces one quarter of the poultry for the
Omani market. It used technology to compete with
Brazilian imports and to reduce dependence on
low-cost labour imports. While current problems,
such as manure treatment, wastewater and
effluent disposal, present technological challenges,
it has initiated cooperation with SQU on water
treatment, and manure from poultry is used as an
input in mushroom cultivation, for which
commercialization prospects are being studied. It
was stated that A’Saffa Foods had no plans to
develop and register IP for any advances that
might be achieved. The spokesperson for the
company said that general infrastructure, such as
power and Internet access, needed improvement
in industrial zones.
Land use is determined primarily by the availability
of water. There is extensive cultivation in coastal
areas (Al Batinah and Al Sharqiya), while in the
interior, agriculture is dependent on wadis and on
the fallaj water canals for irrigation. However, the
coastal regions generally suffer from a drop in the
water table and its increasing salinity. The decline
in the importance of agriculture as an economic
sector is worrisome, especially in view of a number
of established agricultural research and extension
activities. Research is conducted not only under
the aegis of the Ministry of Agriculture and
Fisheries and the Directorate General of
Agricultural Research, but also collaboratively with
international
and
regional
organizations,
universities and NGOs. Donors and technical
agencies, such as the Food and Agriculture
Organization of the United Nations (FAO), the
United Nations Development Programme (UNDP)
and the World Bank, have funded R&D projects
relating to the improvement of pasture resources,
which is an important area. Collaborative research
activities include seed technology and biodiversity
of pasture plants and a national gene bank.
Oman has a well-organized agricultural extension
system that trains farmers on improvement of
forage resources, and agricultural colleges and
specialized agricultural cadres have been working
on technologies related to forage production. Thus,
given that the components of an innovation system
in agriculture are in place, policymakers need to
devote some attention to looking at the structure of
incentives in the sector as a whole, and how
adjustments in incentives could contribute to
improving innovation outcomes. Apart from
promoting linkages between agriculture and
research, policymakers need to look at agricultural
value chains and in industrial counterparts in
agriculture,
such
as
fertilizer
production,
construction and power generation, and transport
and logistics.
Tourism
Oman has become an increasingly attractive travel
destination over the past decade, generating 1−1.4
million international overnight stays per year, with
each visitor spending about $1,000 per overnight
stay. The tourism industry in Oman is
comparatively new, and while it constitutes a
relatively small part of the total economy, its size is
close to global averages, as indicated in table 22.
International tourism represents one third of the
total worldwide trade in services.
Tourism is seen as a major contributor to
economic diversification, as it is an important
export-oriented sector that engages a large
number of industries and services as suppliers and
providers of logistics. Policymakers also look to
tourism for its potential to increase the level of
employment of Omanis in the private sector and to
Chapter 8: An economic diversification and innovation strategy
59
Table 22: Direct contribution of travel and tourism to GDP, 2003−2012 (per cent)
Region/Year
2003
2004
2005
2005
2007
2008
2009
2010
2011
2012
EU27
3.3
3.3
3.2
3.2
3.1
3.0
3.0
3.0
3.0
3.0
Oman
4.7
4.8
4.8
3.2
3.6
3.1
3.4
3.1
2.9
3..0
Middle East
World
3.3
3.1
3.4
3.1
3.3
3.1
3
3.1
3.1
3.0
3.1
2.9
3.2
2.9
3.2
2.8
3.0
2.8
3.0
2.8
Source: World Travel & Tourism Council; see: http://www.wttc.org/research/economic-data-search-tool/.
involve local communities and engage local
businesses. There is an established awareness
about developing sustainable tourism practices
and nurturing respect for the natural environment,
customs, traditions and cultural heritage. While
government policy encourages FDI, it is conscious
not to over-size the sector. A major obstacle to the
development of the tourism sector is the multitude
of ministries and authorities that are involved in
regulating standards of operations, such as
building codes or phytosanitary certification. This
suggests the need for a more coordinated
approach to the strategic development of the
sector requiring all stakeholders and beneficiaries
to act in concert.
The Government has set a number of policy
targets for the tourism sector, including increasing
the level of Omanization in the sector from the
current level of 50 per cent, and involving and
securing economic benefits for local businesses
and communities. Key issues include sustainability
and environmental impacts, as well as managing a
positive impact on the preservation of local
customs, traditions and cultural heritage. While
increasing the number of visitors from the GCC is
a primary objective, growing global recognition of
Oman as a prime tourism destination will bring with
it some challenges. For example, targeting wealthy
niche
tourists
by
focusing
on
cultural,
environmental and adventure packages has
become a strategic priority (Baporikar, 2012) in
need of implementation. Oman has the advantage
of being able to learn from the abundance of
positive and negative experiences of other
countries in their promotion of the tourism sector.
Policymakers need to undertake a more in-depth
analysis of the nature of the contribution of the
tourism industry and its impacts in order to make
informed and evidence-based policy decisions
(Ministry of Tourism, 2010). A large number of
institutional and economic factors must be taken
into account for achieving strategic goals and for
supporting the overarching goal of diversification.
For example, as in other sectors, human capacitybuilding is critical. It is essential for the Ministry of
Tourism to participate in the design of the
curriculum for the SQU’s bachelor’s degree in
tourism and in that of the Oman College of
Tourism. Increased coordination among the
stakeholder institutions would result in an improved
alignment of competencies of the graduating
students with the demands of the industry. This is
important, given that many graduates with tourism
degrees seek work in the Ministry and in other
government offices instead of in tourism firms.
Improving cooperation would also contribute to a
better assessment of future trends in the tourism
and travel sector which would help improve
curriculum design. There is greater potential for
SME involvement, but this requires their
technological updating and a corresponding
access to finance.
There is also the need for a better understanding
of Oman’s ecosystems and the value of its
biodiversity for the present and future tourism
industry. This necessarily means deepening
institutional linkages between the Ministry of
Tourism and investors, and between the Animal
and Plant Genetic Resource Centre of Oman and
academic research centres. With regard to
regulatory issues, those enterprises that have
taken the lead in integrating environmentally
responsible behaviour in their core organizational
practices should share their knowledge and help
other tourism firms, many of which are their
collaborators and suppliers, to achieve similar
levels of corporate governance.
A key issue in tourism development is the source
of investment funding. In Oman, the Governmentbacked firm, Omran, was set up to deliver major
projects and to manage assets and investments in
the tourism sector with a view to making tourism a
major economic driver. Omran works with national
and international partners to create successful‚
revenue- and job-generating projects. So far, there
is no established break-even or profitability
horizon, and success is measured primarily
through build-out and expansion of capacities. In
this sense, Omran invests strategically and ahead
of precipitation of interest in the private sector.
The management of facilities is leased out to
private firms, many of which are international
operators and which provide enhanced
opportunities for on-the-job training. Omran’s
interaction with other sectors includes sending
its experts to lecture at the College of Tourism
and developing local suppliers, such as farmers
and cottage industries by encouraging their
participation in general and technological
upgrading programmes so that they can meet
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Science, Technology and Innovation Policy Review - Oman
required
standards
of
quality.
Among
innovations that have been promoted are green
construction,
eco-friendly
design,
soft
technologies and the development of a code of
conduct for sustainable tourism.
Crafts and traditional industries
Crafts and traditional industries occasionally have
been cited as having potential for innovation and
diversification. 63 Crafts and technology may not
seem to be the likeliest of partners; however, if
innovation is viewed more broadly as the
introduction of new products and services, or new
technical or process innovations in the production
or delivery of new or existing products and
services, there is certainly scope for including
this sector in a national innovation and
diversification strategy.
The basic problem with traditional crafts is their
small productive base, modest market demand
and negligible impact on the overall economy.
Thus, the fundamental issue is one of scaling up. It
will be necessary to determine whether investment
in innovation will enable expansion of these
activities to generate an increase in sales and
revenues, and whether demand could be managed
and stimulated. Scaling up crafts to SME or
industrial production is a major challenge. People
engaged in crafts in Oman are eligible for SME
project support. However, to access that support,
the craft needs to be compatible with the goals of
preserving and supporting the Omani identity. This
is a key component of the definition of traditional
crafts, reflected in the use of visual national
symbols (e.g. forts, castles, the khanjar knife − a
traditional, ornamental dagger worn by men for
ceremonial occasions).
A more complex issue is how traditional industries
interact with R&D entities and what outcomes can
be expected, either in a commercial sense or from
a purely learning and innovation systems
development perspective. What lessons can be
gleaned by bringing this sector under primary
consideration of a national innovation strategy?
Other problems exist that are not entirely typical of
the sector, such as a lack of marketing skills and a
level of risk aversion that is incompatible with
the level of entrepreneurship required for
commercial success.
The Public Authority for Craft Industries (PACI) is
responsible for developing the crafts sector in
Oman. PACI’s objectives include executing
approved plans and programmes relating to craft
industries,
surveying,
documentation
and
protection of all craft industries and their raw
materials and uses, and responding to their R&D
needs, as well as assisting people engaged in
crafts on administrative and technical issues. For
example PACI provides support to local artists in
IP registration of design with MOCI. It also
provides training and qualification services, helps
develop creative, leadership and technical
capabilities, assists in creating new marketing
outlets for Oman’s crafts domestically and globally,
and develops cooperation with the private sector
and with craft industries in other countries. The
chief constraint is funding of research, as the
largest proportion of the PACI budget is allocated
to salaries.
The UNCTAD mission in December 2013 was
informed that PACI has a strong motivation to
engage in research only if there is a commercial
outcome. For example, PACI has researched the
options available for the use of various local wood
species bearing in mind issues of sustainability
and toxicity. From a potential selection of usable
trees, more than 60 per cent of species have
been identified, and some 1 per cent (10) will be
used. Another issue is that raw materials are
imported
and are
a fundamental cost
consideration. Basic innovation efforts include the
development of local materials to replace imports
(e.g. wood, clay, glazes, dyes and bone). For
example, PACI has received finance for projects
from TRC for research, in cooperation with
SQU, on the exploitation and use of locally
abundant clay materials and natural dyes to
replace imports.
PACI has 9,000 members many of whom are
women homemakers in rural areas. Certification is
done by PACI staff who visit crafts people and
discuss, document (photograph) and offer
membership. There is a need to improve the use of
ICTs, but individual crafts people are increasingly
using social media without waiting for any
institutional support.
8.5 Conclusions and policy recommendations
Multiple policies need to be implemented to
improve the chances for successful diversification
with a strongly positive economic outcome. This is
because diversification itself is a complex process
that involves the interaction of all participants in
development and all entities invested in technology
and innovation processes. In order to develop the
requisite linkages among key stakeholders it is
necessary to establishing a national innovation
system framework. Developing institutions is not
necessarily a target if a coordinating structure can
ensure implementation. However, given the
general lack of communication at all but the
highest institutional levels and the strong
inclination of top government and corporate
executives
to
act
as
information
and
communication gatekeepers, institution building
may also be needed, provided it is mandated at
the highest level of government, above the
ministries, and reporting directly to His Majesty
Sultan Qaboos and his Cabinet of Ministers.
Chapter 8: An economic diversification and innovation strategy
A second prerequisite is to establish an evidencebased policy management system that uses active
monitoring and evaluation to track progress,
understand difficulties and obstacles, and ensure
that solutions and remedies are implemented
effectively and efficiently. This necessarily means
dealing with failures in policy. It may also require a
decisive and purposeful change in culture and
attitudes for dealing with failure.
Thirdly, a labour and human capacity-building
policy needs to adopt short- medium- and longterm perspectives, as diversification is a
continuous process. This means increasing the
level of interaction between firms and educational
and academic institutions in order to better match
supply and demand for various specializations
and competencies. This would necessarily
include instruction on entrepreneurship, though
61
this alone does not lead to the formation of
entrepreneurs. While such instruction should not
be discouraged, pushing newly graduated
students to develop start-up businesses as a
response to a lack of employment opportunities
for young Omani nationals is a suboptimal
policy. The critical role of tacit knowledge and
uncodified and informal competencies that are
acquired through on-the-job experience should
not be underestimated.
Finally, policymakers need to determine the
acceptable level and nature of involvement of
FDI in the national diversification strategy, as
well as the overall balance between technology
transfer and domestic innovation and investment
in R&D to generate competitive exports that can
lead to diversification and reduce Oman’s
dependence on oil exports.
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Science, Technology and Innovation Policy Review - Oman
Chapter 9: Policy recommendations
63
PART III: RECOMMENDATIONS AND CONCLUSIONS
9. Policy recommendations
In a context where several simultaneous
challenges need to be addressed, many measures
can be envisaged.64 However, it is important to set
priorities,
particularly
because
government
capacities are limited. First of all, there should be a
clear and powerful engagement. With this in mind
there are three important points related to national
mobilization, top-level coordination and a gradual,
but transformative, approach. Such an approach
should be supported by a profound process of
change management that will help set the
organizational framework and mindset needed to
identify the root causes of fragmentation and
address this issue with determination. All three
points of strategic importance are inspired by
lesson learned from international experience,
notably from countries with low or uneven science
and technology capacities that have successfully
embarked upon innovation-driven development
strategies (Centre for Mediterranean Integration,
2013).
9.1 Strategic prerequisites
National mobilization
Oman is currently elaborating a new long-term
vision with a horizon of 2040. Innovation should be
at the core of such a vision and should mobilize
society behind a common mission. Example: “We
are building a society and economy fully engaged
in the global, knowledge economy in order to offer
many opportunities to the youth of Oman to
express their creativity and ambitions. With this in
view, we will undertake a number of bold reforms
and programmes”.
To realize this ambition, it would be appropriate to
propose to the Omani society an Innovation
Compact built on a few appealing concepts, as
follows:
• The Omani identity, which is that of an Arab
maritime country open to the outside world,
confident in its identity, with an inner diversity
and at ease in interacting with other cultures
− an image particularly adapted to insertion
into today’s global economy;
• The Omani sense of excellence, which should
inspire what is done in all sectors of the
economy and society – a value which is a
major foundation for competitiveness and
which is familiar to Omanis;
• The imperative of sustainability, applicable to
environmental protection and conservation,
but also to broader societal issues such as
the sustainability of quality jobs offered to
everyone, improved welfare for all, the
safeguarding of the national cultural heritage.
Of course, there will be a need to implement such
a vision through concrete actions and also by
communicating it to the population in a credible
manner. At the same time, the “innovation
compact” should include a number of measures
that the Government commits to undertake with
the active support of the population and key actors
(i.e. business and academic communities), and
progress in their implementation would need to be
monitored.
To be coherent in the broader context of the
elaboration of a new development strategy, this
innovation compact should be developed and
implemented in tandem with a new “Social
Contract” in line with a redefinition of conditions of
employment, training, pensions and leisure. These
need to be among the fundamental pillars of the
2040 Vision.
Top-level coordination
In order to implement efficient STI policies with a
view to boosting the overall economic development
of a country, it is necessary to have strong
coordination at the top level of government, as
illustrated by recent success stories, the most
emblematic being those of Finland, the Republic of
Korea
and
Singapore.
The
coordinating
mechanisms put in place in Finland – a country
functioning with a consensus-based culture – can
be a reference for best practices for Oman.
Finland’s key coordinating mechanism has been
the Innovation Policy Council (called the ST Policy
Council at its creation in 1990). This Council is
chaired by the Prime Minister, and involves all key
ministers (including the Finance Minister) and
heads of concerned agencies (e.g. the Academy
of Sciences and the Innovation Promotion
Agency), as well as top representatives of
business and civil society organizations (e.g. trade
unions). It used to meet twice a month to discuss
implementation of strategic decisions, including
budgets, sector reforms and new programmes.
In Oman, a similar mechanism could be
established to report to His Majesty Sultan
Qaboos. To a large extent, the National Innovation
Strategy Grand Committee governing this
UNCTAD STIP Review could form the nucleus of a
similar institution. 65 It needs to be enlarged to
include other key ministers, such as finance, and
top-level representatives of the business sector,
trade unions and civil society organizations. It
should meet regularly, at least once a month,
focusing on strategic issues and decisions and be
concerned only with broad resource allocations.
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Science, Technology and Innovation Policy Review - Oman
Chart 17: A pragmatic agenda: From micro reforms to major changes
It should not be involved in operational tasks and
activities, including the management of policy
measures, schemes and incentives.
It is important to emphasize that overall
coordination does not mean centralization, or,
particularly, centralization of support and funding
for STI. There is the risk that in order to avoid
duplication between agencies, or turf battles
among government bodies, all financial and
technical support may become centralized in one
single administrative authority. This is not at all
advisable. It would lead to an excessive
concentration of power and to a situation that
would be, in any event, inefficient and
unmanageable. A certain distribution of power and
judgment, adapted to the different functions to be
assumed by STI policies, is necessary.
On the other hand, high-level coordination must
not be allowed to devolve into committees that
become discussion clubs without sufficient ability
or authority to implement horizontal and crosssector programmes to counteract fragmentation.
To minimize this risk, the Omani innovation system
is clearly in need of an entity entrusted with a
mandate to actively initiate and coordinate
implementation of cross-sector initiatives and
programmes, rather than to take on a strategic
orientation role that belongs to the higher body
referred to above. A stronger TRC with the status
and capabilities to be an effective counterpart to
line ministries could play such a role.
In order to build a high-level corps of agents of
change with a long-term, sustainable perspective,
Oman’s leadership could be inspired by another
important measure taken by Finland in the 1970s
consisting of an R&D support body attached to the
Parliament (SITRA). This body used to organize
regular weekly sessions for political leaders, senior
government officials, members of parliament,
business managers, trade unionists and city
mayors, among others, in order to keep them
informed and involved in the main macroeconomic
and fundamental policy issues of the day, including
those relating to STI. These sessions involved
hundreds of people each year, and have often
been convoked to review policy and developments
in subsequent years. This scheme, which is still
operating today, has been instrumental in
facilitating reform processes in Finland and
adaptation to global opportunities and external
shocks and pressures.66
A pragmatic approach
In development policies the really difficult question
is “how to do”, rather than “what to do”. In this
regard, international experience suggests a
pragmatic, gradual approach (as illustrated in chart
17). In a first stage, the strategy begins with some
well-targeted, micro and meso-level projects.
Successful projects help build credibility and create
positive attitudes to change, including among
policymakers.
The second phase should lead to a critical mass of
projects, inspired by both bottom-up and top-down
initiatives. This prepares the ground for a third
phase when major, broad reforms can be
implemented. This approach, which may be
termed “radical gradualism”, mixes a short-term
agenda with quick-win results and a longer term
agenda involving deep transformation.
To a certain extent, Oman has completed the first
stage and is ready to embark on the second one.
Such a strategic approach could have two
elements: a first batch of measures with a shortterm impact facilitating the rapid emergence of a
critical mass of innovation projects and
opportunities; and a second batch of actions of a
more structural nature, with a longer term impact.
Both batches would need to be implemented
immediately, within the limits of government
capacities and resources – financial, managerial
and administrative.
Chapter 9: Policy recommendations
Another important point to emphasize is the need
for a holistic approach for improving the overall
innovation climate, while being focused on what
really matters. From this viewpoint, a gardening
comparison can be useful for guiding government
action. Innovation projects, to flourish, are like
plants. They need: (a) watering, i.e. adequate
financial, technical and other support; (b)
eliminating pests and weeds that prevent the plant
from growing, i.e. eliminating all kinds of obstacles
to innovation, such as excessive bureaucracy and
anti-competitive behaviours; (c) fertilizing the soil,
i.e. research efforts, and technology and
knowledge transfer from abroad; and (d) preparing
the ground, i.e. establishing an appropriate
education system and creating an adequate
technical and entrepreneurial culture. Currently,
Oman has identified the need to act on these four
policy functions, but much more needs to be done
in a more integrated manner.
9.2 Innovation agenda: Actions with a
short-term impact
Harvest the low-hanging fruits
Among the measures that can have an immediate,
important effect on the economy, priority needs to
be given to Internet access, including lowering its
price and widening its access. No progress
towards an innovative industry, a knowledge
economy and a creative society is possible without
broad and affordable use of the Internet. As noted
in this Review, Oman trails behind other countries
of the region in this respect, including having
strong restrictions in place (e.g. affecting the use of
certain VoIP applications).
Efficient pricing and liberalization measures in this
field would help boost the “creative industries”, so
far embryonic in Oman. Adequate support for
specific projects, including for the development of
sites with Arabic content and the localization of
software, in particular those under open and public
licences, would be useful as well. Most critical,
however, is to put in place a framework for
stimulating linkages between ICT and innovation.
This would require reforms to the education
system as well as a more enabling role of the
government vis-à-vis the private sector, including
its adoption of policies that are more conducive to
innovation and entrepreneurship looking to
respond to unfulfilled needs with commercial
products and services.
Another set of opportunities with short-term results
consists of projects supported by innovation
promotion measures that have been put in place in
the past few years, such as the Innovation Hub
project at TRC and the Industrial Innovation Centre
and other incubating structures. Although modest
in size and ambition, they have led to the
65
implementation of various innovation programmes
and projects with good marketing and
commercialization prospects. A focused, sustained
effort to mobilize adequate trade networks and
venture capital, and/or the removal of regulatory
barriers, could foster entrepreneurship, build
awareness of the need to innovate and generate
pride and self-confidence. The resulting success
stories would serve to demonstrate and inspire the
young to become innovators and entrepreneurs.
Institutional auditing
As noted, there are many obstacles of a formal
and informal nature, including the silo syndrome in
government structures, cumbersome bureaucracy
in government-business relations, anti-competitive
behaviours that affect the business climate,
overregulation within educational institutions,
salary scales which adversely affect the
recruitment or employment of researchers and
technologists, regulations that prevent the
commercialization of new products, or conversely,
a lack of regulations that prevent, for example
excessive pollution or energy use. These are
among the many elements that deter the creation
of an innovation climate in Oman.
Experience shows that eliminating obstacles to
innovative initiatives immediately creates a more
dynamic climate, even if it does not lead rapidly to
the introduction of new products, processes or
services on the market or the generation of an
adequate turnover and profits.
Reducing or removing obstacles to innovation
requires determined actions and adequate
instruments. To be efficient, a body answerable to
the highest level of government should be
responsible for policy formulation. An enlarged
National Innovation Strategy Grand Committee
evoked above could be such a body. But it should
be independent and open to any kind of
investigations, and it should be staffed by
representatives of the judicial system, the
parliament and the government administration.
Importantly, the audit should not consist of simply
producing a report (or reports); it should be a
process conducted through an established,
durable mechanism responsible for due follow-up
to check that the proposed reforms and actions
needed to remove any obstacles (e.g. deregulation
or law enforcement) are effectively implemented.
The best way to proceed is to start with recording
dissatisfaction and complaints from the concerned
actors and then examining in detail the issues
raised and the factors and obstacles responsible.
The goal is not to proceed with any kind of in-depth
evaluation and subsequent discussions of
institutions or programmes, but to identify
regulatory, legal and behavioural obstacles to
innovative undertakings and remove them.
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Science, Technology and Innovation Policy Review - Oman
Oman would be a pioneer in creating such a
process. Although a number of countries have
identified the importance of overcoming obstacles
to innovation, none has really undertaken wide and
sustained actions, as suggested above. They have
tended to limit their actions to specific sectors (e.g.
telecoms), or to the simple commissioning and
publication of reports.67
Leveraging public markets and
infrastructure projects
The Government is very active in many sectors,
notably those concerned with the development of
transport infrastructure, energy and construction. It
can substantively contribute to promoting
innovative products, for example through norms for
energy consumption, regulations for environmentfriendly materials (such as the banning of plastic
bags), guidelines for food safety and standards for
working conditions. The identification of those
areas requiring innovation-oriented regulatory
measures can possibly be a task of the body
responsible for fighting obstacles to innovation
mentioned above.
Another dimension to be considered is the use of
procurement policy to help SMEs upgrade their
technology or offer innovative products. The
measures recently taken to reserve 10 per cent of
public procurement purchases to SMEs are
welcome, but it is important that the use of public
procurement for boosting the development and use
of new technologies be clearly and actively
integrated into innovation policy.
9.3 Innovation agenda: Actions with a
longer-term impact
A series of actions with longer term goals should
be implemented to complement the measures that
can have a short-term, visible impact. Possibly,
these could begin with pilot initiatives in selected
policy areas that require experimentation or
demonstration effects.
Stimulate creativity and entrepreneurship
among Omani youth
The first and major hindrance to innovation in
Oman is an insufficient number of entrepreneurs
with innovative ideas and willing to take risks in
unchartered waters. Creating a critical mass of
such people will take time. Measures envisaged for
people employed by the Government can be
useful, but they are not sufficient. Measures
envisaged by the Ministry of Manpower for the
vocational schools seem to be excellent and need
to be implemented as soon as possible, perhaps
on a pilot basis before their implementation
nationwide. In a similar vein, incubating structures,
with appropriate coaching and support, need to be
increased in universities and colleges to attract
and support interested students. A complementary
action that has proved to be particularly stimulating
is the development of “Fab Labs” in which
students, innovators and entrepreneurs are invited
to develop new products that could then be
prototyped through 3D printing. Multiplying such
workshops throughout the country could stimulate
entrepreneurial creativity.
In universities and colleges, the proposed
institutional audit should help reduce institutional
obstacles arising from excessive bureaucracy and
administrative burdens, as well as, hopefully,
distortions resulting from low salary scales. For
improving their governance and management
capabilities, Oman’s universities could use the
model created by the Centre for Mediterranean
Integration and the World Bank for the
Mediterranean and Arab countries based on a
self-assessment scorecard (World Bank, 2012).
Some experimental approaches should also be
initiated. For example, the planned new S&T
University could offer an opportunity to build a
truly innovative academic institution, blending
studies in science and technology, business
management, and art and design. This model,
pioneered in Finland’s Aalto University and
spreading to a number of countries, is based on
the notion that innovation results from the
combination of several types of competencies.
In addition to reform of middle and higher
education, more effort is needed to improve the
quality of primary and possibly even early
childhood education. It is fundamental to develop
the creativity of children by radically changing
teaching practices which encourage rote learning
(i.e. requiring repetition and memorization of texts
and concepts). Children should be taught ways
and means of experimenting, discovering, using
their judgment and testing their capabilities.
Initiatives should be launched throughout the
country, along with an overall improvement of
teaching methods and teacher training courses to
ensure quality teaching of basics: reading, writing
and mathematics. If these much-needed reforms
are not properly and rapidly undertaken by the
Ministry of Education, private schools will
continue to proliferate, and inequalities will grow
between families who can afford to place their
children in them and other families that are
obliged to send their children to poor quality
public schools.
Strengthen R&D and innovation support
As noted above, more sophisticated measures and
increased support are needed to strengthen R&D
and innovation. The following three types of
measures could be implemented: (i) financial
support schemes, (ii) technical, commercial and
other support in form of “local innovation houses”,
Chapter 9: Policy recommendations
and (iii) strengthening leadership capabilities in
their role of information gatekeepers.
(i)
incubators), as well as clustering opportunities in
the industrial, agricultural and services (tourism)
sectors.
New financial support schemes
To foster university-industry collaboration in
research, a scheme, inspired from those used in a
number of countries, is proposed. It will provide
support to projects jointly identified by the
collaborating entities on the condition that the
business sector funds 50 per cent, with the
government contributing the other 50 per cent.
This new scheme could take the form of a new
programme added to those implemented by TRC.
Individual innovators’ projects could be supported
by a scheme similar to the National Science
Foundation’s Small Business Innovation Research
(SBIR) programme in the United States, which has
been implemented for the past 30 years and has
an excellent track record. It could be implemented
gradually, initially with the Government providing
full support in terms of seed money, and then
gradually transferring support to the private sector,
most notably to venture capitalists. An analogous
scheme may be developed through the current
financial assistance provided under the Individual
and Community Innovation support scheme
operated by the Innovation Hub while the
Government needs to be prepared to provide more
resources per project.
For stimulating investment in R&D in enterprises,
notably in big businesses, a tax incentive in the
form of a significant tax relief could be instituted on
an experimental basis for several years (e.g. five
years). Such a scheme has proved to work
successfully in economies based on natural
resources that are seeking industrial diversification
(such as Australia and Norway), where large
corporations are involved in resource exploitation.
However, the potential impact of such a scheme in
Oman remains rather uncertain, as the taxes
imposed on businesses are already quite low. This
is why it is suggested that the tax relief be
instituted for a limited period of time initially, with a
rigorous impact evaluation.
(ii)
67
Local innovation houses
Innovation, particularly at the small firm and
individual level, is fundamentally a local
phenomenon that is initiated by highly motivated
groups of people rooted in the place or area where
they work and study. This is why several countries
have set up small support structures to help such
local innovation dynamics to take shape and grow.
A similar structure could be set up in Oman where
there remains a strong sense of regional and local
identity in the different provinces and cities that
constitute the Sultanate. In each of the main cities
there are colleges and universities, as well as
burgeoning innovation initiatives (e.g. in the form of
In order to take advantage of these assets and
stimulate potential innovators and entrepreneurs,
local innovation houses should be opened where
they could find information on all types of support
(e.g. technical, commercial and financial) for their
projects. Such houses should be opened in all
significantly large cities of the country (possibly a
dozen). The local and provincial authorities should
be involved in the establishment of these houses,
their running and the funding of their staff
(preferably paid as private contractors, rather than
as civil servants).
(iii)
Enterprise and institutional
management
Successful absorption of knowledge and the
capacity to innovate depends on efficient
communication flows between an organization and
its environment as well as inside the organization.
In today’s conditions of rapid and uncertain
technological change, the function of the
knowledge and technology gatekeeper can
become highly formal or rigidly centralized in order
to reduce anxiety in decision-making, as seems to
be the case in Oman. Senior executives and
policymakers tend to act as de facto
communication gatekeepers, and have taken upon
themselves the highly critical role of heavily
influencing the innovative and creative capacities
of the institutions they lead
However, when it is not obvious where and how
new external knowledge can best be applied, a
high-level gatekeeper may not provide an
effective service. Relying on the chief executive
of an institution as a gatekeeper may not allow
the smooth flow of information across that
institution and is at odds with the increasing
knowledge networks at all levels of human
endeavour. To remedy this problem, Oman’s
policymakers need to actively encourage greater
interdepartmental,
inter-institutional
and
interdisciplinary communications among their
staff and experts. Organizing multi-stakeholder
seminars focusing on specific technologies or
issues (e.g. sector development, infrastructure
renewal, or social needs) could be helpful in
this respect.
Launch a large-scale programme
on environmental stewardship
Oman needs to mobilize its creativity on issues of
global importance, and which relate directly to
major problems it is facing or will be facing in the
coming decades. One such issue concerns
stewardship of the environment. So far, this has
received little attention: Oman’s carbon footprint is
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Science, Technology and Innovation Policy Review - Oman
Box 9: TRC – GUTech Eco House project
The Sultanate of Oman is currently experiencing a rapid increase in population, a steep increase in energy consumption, and a
steady decrease in fossil energy resources, which make the design of an ECO HAUS relevant and timely. Therefore, The Research
Council of the Sultanate of Oman initiated a competition among five universities of the country to design, build and operate a zeroenergy house on their campuses. The teams are collaborations of students,
staff, consultants, and companies. Located on the new GUtech campus in
Halban, the ECO HAUS is a two-storey residential building of 200m2 that
will serve as a guesthouse. The concept is based on ten strategies for
energy-efficiency, which can be precedents for other projects.
1.
2.
3.
4.
5.
Optimal Orientation
Natural Ventilation
Protective Envelope
Radiant Cooling
Energy Recovery
6.
7.
8.
9.
10.
Efficient Appliances
Solar Power
Recyclable Materials
Treated Water
Native Plants
The Eco House concept results in a building that can be operated at net
zero-energy and achieves full comfort for its users. The building will be
constructed throughout 2013 and will be operational in 2014.
Source: GUTech
enormous,68 its agriculture consumes considerable
amounts of water, and its public transport system
is underdeveloped.
pride among local populations. Local authorities
and city mayors, as well as citizens of all ages,
should be involved.
An environmental stewardship programme should
be cross-sectoral, involving many ministries. It
requires actions in R&D, public procurement,
norms and standards, training and education,
among others. Moreover, it needs to produce
visible results in the not too distant future, at least
in the form of pilot operations and demonstration
projects. There are a number of such operations
that are currently supported by TRC, such as the
“passive eco house” project (see box 9). Other
ministries also have environment-friendly projects,
such as water saving irrigation and tree planting in
desert areas, which can constitute a promising
nucleus and be scaled up and expanded. The
media should be mobilized to promote campaigns
in this area in order to create awareness and instil
The Government of Oman has demonstrated that it
can very effectively mobilize all needed resources
and actors on very large infrastructure projects.
This capacity should be applied to a Grand
National Environment Stewardship Programme
which could also serve as an example for other
countries in the Gulf and Arab region.
Foster international and regional
integration
As noted earlier, numerous steps have already
been taken in many parts of the innovation system
to enable it to participate in the international arena
and benefit from global knowledge and technology
inputs. However, more can be done in this respect.
Box 10: Nimr Reed Beds
Petroleum Development Oman, the Omani national oil company, currently produces 9 barrels of water for a barrel of oil. Part of this
water is used for water injection to maintain reservoir pressure. Deep water disposal below the producing reservoir has so far been
used to manage the excess water – a wasteful practice considering that Oman is situated in one of the world’s most arid regions. To
remedy this situation a reed bed-based water processing system has been designed and implemented south of Muscat in Oman
through a partnership between Bauer Environment and PDO. Evaporation ponds extend over a surface of 3 million m² while the
overall area of the wetland is 3.8 million m². Compared to deep disposal wells, this reed bed approach has zero energy requirements
and a significantly smaller carbon footprint.
The Nimr oilfield requires 250,000 m³/d of water to be managed to keep oil production going and deep disposal wells were the
traditional solution. However, the Nimr reed beds are an innovative solution as they address the issues of loss of revenue from oil left
in produced water, and the stricter environmental regulations, high energy costs and the carbon footprint associated with deep water
disposal wells. The treatment starts with an oil and water separator after which the water is distributed into a wetland facility where it
is channelled through four wetland terraces by gravity feed. Evaporation ponds are used for salt recovery, which is reused for drilling
operations in the oilfields of Oman, and the reed beds produce biomass and are used for biosaline agriculture. More generally, the
project is generating job opportunities and new business prospects for PDO and associated firms.
Current research is evaluating water re-use options through a cooperation between Bauer Nimr and the International Centre for
Biosaline Agriculture, a not-for-profit, international centre of excellence for research and development in marginal environments
hosted by the UAE. As well, there is ongoing research in cooperation with SQU evaluating the feasibility of generating hydropower.
Source: PDO and Bauer Environment
Chapter 9: Policy recommendations
Firstly, in view of the importance of Omani joint
ventures with foreign firms, the Government could
adopt a more proactive policy to stimulate –
possibly impose – local production of spare parts
and components for some goods produced or
imported in Oman. This could accompany
programmes of technology transfer and/or
management
assistance
to
support
the
development and growth of local businesses.
Ireland’s national Linkage Programme for the
electronics industry offers a good example (Görg,
2000). Schemes supporting joint R&D between
foreign firms and local businesses and universities
could also be encouraged, such as the
collaboration between Petroleum Development
Oman (PDO) with Shell and Schlumberger in
Oman. The Nimr Reed Beds project is another
interesting example of collaborative innovation with
positive outcomes (see box 10).
Links with international research networks could
also be strengthened, and, notably, more or less
formal networks developed with establishments of
the GCC countries through adequate incentives.
The small economies of the Gulf, individually, do
not have a critical mass of researchers for
pursuing research in several disciplines, or even
being associated with prestigious institutions
abroad (such as Cornell in Qatar or La Sorbonne
in Abu Dhabi). It would be useful to organize
research networks at the GCC level by creating
teams from several universities in programmes of
common interest to two or several GCC countries
on the model developed at the EU level, or on a
more modest and feasible scale as in Canada.
This has already taken place in the oil and gas
sector where there are several GCC theme-based
committees that meet regularly to exchange
information, such as the GCC National Oil
Companies Technology Managers Group, which
explores joint research opportunities.
Another possibility is the creation of a free market
area within the GCC. The small size of the GCC
countries, with the exception of Saudi Arabia,
inhibits the commercialization of new products or
services developed in those countries. A certain
harmonization of standards, and even some joint
public
procurement
procedures
open
to
businesses from all the GCC countries, would be
very helpful for intending innovators, and Oman
could take the lead in this.
69
For Oman, it is suggested that efforts be made in
the following five domains as a matter priority:
x Collect R&D statistics based on the model
and guidelines of the Organisation for
Economic Co-operation and Development
(OECD), which have become the international
standard (see the Frascati Manual, first
published in the late 1960 and regularly
revised thereafter).
x Conduct innovation surveys. Again the
OECD/EU guidelines (Oslo Manual for
Collecting and Interpreting Innovation Data)
would
be
useful.
However,
simpler
approaches using available web-based
technologies could be adopted for a more
rapid assessment of innovative activities.
x International education tests, such as PISA
(the OECD-administered survey), which
allows the measurement of all development
levels, and shows how gaps vis-à-vis top
performers are being reduced.
x Programme evaluations. It is crucial to
perform such evaluations with international
teams to examine how programmes are
managed, comparing the results achieved visà-vis declared objectives, and the outputs
obtained against dollars spent. This type of
assessment would need to complement the
national reviews.
x Innovation and job creation. There is a need
for close monitoring and accurate forecasting
of job creation (and destruction) associated
with innovative activities and technologies,
whatever their nature, disruptiveness, and
degree of diffusion and adoption throughout
the economic system.
9.4 An action plan for a national innovation
strategy and system
Develop evidence-based policies
An action plan for the development of the national
innovation system of Oman will need to follow on
from a high-level policy decision establishing a
national STI strategy as a primary lever for the
innovation-led development and diversification of
the Omani economy. Given that such a strategy is
likely to require considerable competencies,
capacities, resources and funding, a strongly
expressed political commitment will be needed to
reduce uncertainty and mobilize and incentivize
stakeholders.
A major difficulty encountered in performing this
review was the lack of information on Oman’s
science and technology assets, and on
performances in a number of domains (e.g.
innovation or education). This is also a great
handicap for policymakers, because, more than
ever, countries base their policies on the gathering
of factual evidence.
This UNCTAD STIP Review draws certain
conclusions based on its findings, and highlights a
number of issues that need to be addressed, but it
also aims to serve as an input in moving from an
analysis to an action plan. An action plan itself
needs to be elaborated at a level of detail that
requires the intervention of policymakers with the
authority to earmark and commit funding and
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Science, Technology and Innovation Policy Review - Oman
resources and assign responsibilities. To achieve
this,
there
are
certain
principles
and
methodological approaches that need to be
accepted and fully integrated into a future official
national innovation strategy.
All action plans need to analyse the problem at
hand supported by qualitative and quantitative
assessments. Research for this STIP Review, with
the close involvement of TRC, led to a number of
observations. Inputs from the National Innovation
Strategy Grand Committee, the National STIP
Group meetings and the National STIP workshop
provided a wealth of feedback (see box 11) which
should help policymaking. This Review, together
with TRC’s proposals for a National Innovation
Strategy based on its identification of the
innovation pillars of human capacity-building,
awareness of IPR issues and economic
diversification, should
provide
a
detailed
understanding of the vision and development
objectives that need to be communicated to all
policymakers and STI stakeholders.
The NIS Action Plan (NISAP) for Oman should be
able to implement the proposals of the STIP
Review and the Oman National Innovation
Strategy, leading to tangible and measurable
outcomes. The Action Plan will describe how
policymakers use the STIP Review and NIS
Strategy to achieve the desired policy targets and
increase Oman’s innovation outputs. For maximum
impact, the NISAP will need to be comprehensive
in both the changes it aims to trigger and the
stakeholders it involves. Responsibilities for
implementation will need to be clearly assigned.
Finally, the NISAP should address current needs
but with a long-term perspective, working towards
Vision 2040. In this sense, it should be able to
anticipate newly emerging opportunities as well as
risks and potential barriers that are beyond the
purely economic and commercial domains, and
take into consideration issues such as
sustainability, finite natural endowments and
shifting politics in a multipolar world.
The NISAP should contain a sufficient depth of
detail, and not aim at unrealistic targets, as this will
lend credibility to the involved policymakers and
their institutions. Greater clarity and realism will
reassure the authorities responsible for authorizing
funding and resources and improve accountability.
The development of the NISAP should follow on
quickly from the international and national
presentation of the STIP Review and the
promulgation of the National Innovation Strategy,
ideally within the first six months and before the
end of 2014. This assumes that the overall vision,
objectives and strategy for the innovation-led
development and diversification of the Omani
economy are in place, have been well
communicated and have received broad support
from all the stakeholders. It should be stressed that
the NISAP will always be a work in progress: as
the institutional relationships evolve and learning
processes strengthen, there may be a need to
revise and update it.
Inclusiveness is a key factor for success, as many
science, technology and innovation issues affect
society broadly – such as human resources
development through education and vocational
training – and therefore require the involvement of
institutions beyond the usual ones of government,
firms and academia. The media, business
associations and, in particular, SMEs, religious
leaders, youth organizations, representatives of
popular culture and performance artists, social
services and public health institutions, and
representatives of ethnic and cultural groups may
need to be involved in the process of change.
Developing the NISAP will require convening a
planning group, and for this purpose the STIP
National Group may be a good starting point. The
key is to have an operationally capable group that is
inclusive with a membership comprising diverse STI
stakeholders. It will, by definition, have a coherent
vision of the task at hand and of the strategic
underpinnings of NISAP.
The NISAP should develop clear goals and define
the steps needed to accomplish them. More
specifically, it should determine the actions and the
corresponding changes that will need to occur. When
possible, or necessary, specific tasks per action may
be outlined as well. It should assign responsibilities
for carrying out each action step, time frames and
locations, estimate the required resources in terms of
competencies and funding, and designate their
sources. The NISAP will also have to decide on
performance indicators and a method for their
appraisal, as well as establish potential risks and
problems, and plan the required contingencies. It will
include a communication plan as a core action.
Finally, periodic reviews will need to be organized to
gauge implementation and adjust for perceived
changes in the environment.
It is often common for national strategies and action
plans to stop at mere declarations, with little action, if
any, between the concluding meeting and the
subsequent meeting of the planning group, which, in
the meantime, transforms itself into a monitoring and
evaluation body. The risk of this happening can be
minimized by having a strong communications
activity, not only at the planning group’s host
institution, but among all the NISAP stakeholders.
Regular and useful feedback should be required
without overburdening the responsible expert(s) or
institution, as undue effort or unreasonable demands
would serve as a disincentive to future cooperation.
Accomplishments need to be reported through the
media and celebrated as national successes.
Chapter 9: Policy recommendations
71
Box 11: High-level policy discussions as a defining feature of the Oman STIP Review
The NIS Grand Committee
The Grand Committee, the highest level body of policymakers with which the UNCTAD STIP Review team interacted in the elaboration
of this report, affirmed that championing innovation needed to become a national vision while STI stakeholders needed to take
ownership of change process. However, no single agency was currently campaigning for innovation, nor building awareness on this
issue, as its sole mission, while communication on innovation strategy between policymakers could be improved. The Grand
Committee was very clear on its desire to see the STIP Review as a source for the next phase of policy work: the development of the
national innovation strategy / system with an action plan.
Enhancing science and innovation culture went hand-in-hand with entrepreneurship education. Unfortunately, national spending on
professional development was a very small part of the of the total education budget. The vocational training system also does not
extend to develop competencies among foreign labourers where the general skill level can be very low. Regarding general education,
research was needed to address the large differences in performance between schools and to examine why TIMSS 69 scores in Oman
were on the low side.
The intellectual property rights issue, central to technology transfer, was highlighted as a key pillar of the innovation strategy of Oman.
A key concern was the relationship between intellectual property and technology transfer in innovation policy. There were a number of
difficulties in tackling this issue, among which was the need to improve the capacities of the IP office and raise awareness among firms
and institutions that were potential sources of Oman’s intellectual property. The underdeveloped intellectual property system was
forcing inventors to become entrepreneurs – a role they did not necessarily desire. The oil and downstream industries, being capital
and technology intensive, considered intellectual property policy through the lens of concession agreements and contracts and as a
strategic issue and needed to share their experience with the broader economic community.
A number of specific innovation issues were raised. For example, off-grid energy and sustainable energy technologies are potential
areas for consideration, while military procurement could be used to stimulate innovation including in food processing and water
management. Innovation in agriculture and fishing was another serious consideration as its importance as a sector extended to issues
of food security, employment, and social stability. Improving broadband access was, as well, a priority consideration. It was noted that
Government regulation could trigger innovation in water management and energy use and generation.
Labour and employment were important issues that were linked to innovation strategy either through human capacity policy or by
concerns regarding the implementation of the Omanization policy. Employment was very concentrated, with the 12 largest firms
employing more than five thousand workers while 120 thousand firms had less than five workers. Unemployment was not the clear-cut
an issue that available data might show as of some current 100 thousand job seekers about half were actually employed and seeking
better jobs, preferably in government service. Many job seekers were women, however most new jobs were created in Muscat capital
and were not relevant to the countryside which bore the brunt of real unemployment problems.
National STIP Group
The UNCTAD missions to Oman in May and December 2013 could also interact with the National STIP Group which gathered a
number of key decision makers involved in the definition and implementation of policies relevant to STI. Their advice, wisdom and
reflections deeply influenced the assessment presented in this STIP Review. There are a number of interesting and acute points that
came out in the discussion and that bear highlighting on their own, even though they have been fully absorbed in the preparation of
this Review. A key one was that implementing a national innovation strategy was a process of changing mind-sets and thus would
require important capacity building inputs to bolster policymaking and governance on STI issues.
The National STIP Group affirmed that knowledge innovation and technology transfer are interlinked processes. Continuing on the
question of linkages a discussion on the relationship between salary scales, innovation and ToT needed to be better understood in
particular from the perspective of SME development whose primary competitive advantage often came from low-cost labour imports.
An important question was that of quality over size, or: how far should policy support small sectors? Much like financial investment,
investment in policy also needed to gauge its returns on efforts made.
The NSG discussed how fragmentation was sometimes the result of decisions being structured along departmental sectors and
hierarchies in governance, rather than according to innovation priorities. This led to questions about whether consensus-based
decision-making was a valid modality for developing and implementing a national innovation system action plan, post-STIP. While the
fragmentation of processes encouraging FDI and the accompanying technology transfer and innovation were recognized, proximate to
this issue was the problem of inadequate profiling of Oman’s exports. This issue was as well of significance for tourism sector
development where important political risk components were present globally and regionally and could destabilize growth prospects.
The NSG was keen to move on to developing an action plan that would address a number of structural and organizational issues, such
as how innovation programmes hand-shake and where are the loci for formal coordination, what would be the time frames for
implementation, success milestones and the required resources. The question of picking winners among sectors came up, while the
determination to do so would need to come from a much closer technical examination and an assessment of the commercial
environment in terms of markets and value chains.
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Science, Technology and Innovation Policy Review - Oman
Box 11: continued
STIP National Workshop
The STIP National Workshop, held on 10 December 2013, gathered an outstanding representation of Oman’s STI stakeholders from
Government, business, universities and research centres and civil society. A number of issues were voiced and serve to support
certain conclusions and recommendation of this STIP Review. The fragmentation of efforts to increase research and development and
spur innovation was an important problem for the innovation system.
To address this problem policy needed to focus on several key issues. One was the strong ownership of the national innovation
strategy by government. Another issue was the need to nurture entrepreneurship skills through education and human capacity
development policy, while education policy needed to take a more critical stance towards primary and secondary education
performance. Policies on entrepreneurship development, education and vocational training needed to be in concert among them and
with overall development polices. Building an awareness of the differences and the linkages between R&D and innovation was a
critical task and greater cooperation and coordination between universities and firms on human capacity development and
entrepreneurial training was needed. More broadly, the outcomes of the STIP Review needed to be viewed as a matter of social
responsibility.
The source or the drivers of greater innovation in Oman required closer consideration. Certain countries sourced their motivation and
incentives from particularly challenging or opportunistic geographic, environmental or political conditions. However, some participants
deemed that in Oman the incentives for wealth accumulation were strong and were not supportive of value creation which is
underpinned by innovation. This was reflected in the ubiquitous risk-averse attitude in industry and meant that diversification efforts
required particular policy attention and support. The workshop heard that key innovation potential lay with the oil and gas sector and
that much could be accomplished by building on its achievements while addressing the issues of sustainability, in both a commercial
and environmental sense.
The workshop discussed that turning policy and strategy into action and outcomes will face many challenges. A set of reference
indicators to gauge implementation and performance would allow for the strengthening of evidence based policy management.
Indicators need to have a clear transparent methodologies and documentation. Time-bound targets and milestones were an important
component of evidence based policy. The question of designing and implementing a follow-up action plan was appropriately raised
and there were demands that an assessment on policy outcomes be conducted following the publication of the UNCTAD STIP
Review.
To boost its innovative capabilities, Oman should,
first and foremost, try to bring about a change in
mindset. Three key words should capture the
attention of the Government and guide its action:
communicate, inspire and lead.
Inspire. The leadership, policymakers and
government administrators need to set an example
in all aspects of work and life, wherever their
functions lead them, and must include business
communities, academic circles and civil society
groups. These groups should find as many
opportunities as possible to express their creativity
and sense of entrepreneurship.
Communicate. Developing a large media
campaign is fundamental. Notably, local success
stories should be fed to national programmes on
television and to community radio channels to
reach traditional groups, while the Internet
and social media could be used to reach the
young population.
Lead. The importance of an inspiring and efficient
leadership is key in order to initiate and sustain the
required
changes.
Therefore,
politicians,
policymakers and administrators at all levels of
government, from the summit of the Sultanate
down to the smallest villages, need to take on the
challenge of the critical role they need to play.
9.5 Concluding thoughts: Communicate,
inspire and lead
ANNEX: Summary table of recommended actions
73
ANNEX: Summary table of recommended actions
Domain
Recommended actions
National
Innovation
System:
Strategic
prerequisites
Recommendation 1:
Develop a national mission statement and incorporate it into the national innovation
strategy. Suggested statement: “We are building a society and economy fully involved in
the global knowledge economy by engaging in bold reforms and programmes that will turn
Oman into a positive example for other countries.”
Recommendation 2:
Develop an “Innovation Compact” that will feature:
x
The Omani identity;
x
The Omani sense of excellence;
x
The imperative of sustainability; and
x
A new social contract.
Recommendation 3:
Align the National Innovation Strategy with Vision 2040.
Recommendation 4:
Develop a top-level coordination mechanism, an Innovation Policy Council, bringing
together key ministers, top-level representatives of the business sector, trade unions and
civil society.
Recommendation 5:
Establish a sector-neutral operational programme with a long-term perspective and a
management body to build a corps of high-level agents of change.
Recommendation 6:
Ensure implementation of all policies, adopting a gradual approach, and combining
short-term projects, with quick-win results, and a long-term agenda with deep
transformation objectives.
Recommendation 7:
Adopt a holistic approach for improving the overall innovation climate with the
following actions:
7.1
7.2
7.3.
7.4
Innovation
agenda:
Actions with a
short-term
impact
The provision of adequate financial, technical and other support;
The elimination of obstacles to innovation, including a cumbersome bureaucracy
and anticompetitive behaviours;
Increasing research efforts and technology and knowledge transfer from
abroad; and
Reforming and strengthening the education system to provide students with the
needed technical and entrepreneurial competencies.
Recommendation 8:
Harvest low- hanging fruit, i.e. implement measures that can have an immediate and
significant effect on the economy, such as lowering the price of Internet access and
increasing bandwidth to enable wide geographic access to broadband, stimulating
linkages between ICT and innovation, especially with a view to developing content and
creative industries. Obtain approval for the proposal of the National Innovation Centre
and ensure its implementation so that it can support innovation inclusively and at all
levels.
Recommendation 9:
Conduct an institutional audit. Identify and eliminate obstacles and deterrents to creating
an innovation climate. Identify and remove regulatory, legal and behavioural obstacles to
innovative undertakings, and develop follow-up mechanisms.
Recommendation 10: Leverage public procurement and infrastructure projects to promote innovation. Review
tender requirements and regulatory norms for energy consumption, regulations for
environment-friendly materials, guidelines for food safety, work and safety conditions.
Reaffirm procurement policies to support SMEs in the upgrading of their technologies or
innovative products.
Innovation
agenda:
actions with a
longer term
impact
A. Stimulate creativity and entrepreneurship among Omani youth
Recommendation 11: Stimulate creativity and entrepreneurship among Omani youth and develop a critical mass
of entrepreneurs.
Recommendation 12: Multiply the number of business incubators in all universities and colleges with appropriate
coaching and support.
Recommendation 13: Encourage universities to adopt the governance model developed by the Centre for
Mediterranean Integration and the World Bank based on self-assessment techniques.
Recommendation 14: Encourage universities to offer a balance of degree programmes in science and
technology, business management and art and design.
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Science, Technology and Innovation Policy Review - Oman
Recommendation 15: Revise primary school practices to replace rote learning (i.e. repetition and memorization
of texts and concepts) with experimentation and discovery activities. Improve primary
teacher training to ensure quality learning of basics: reading, writing and mathematics.
B. Strengthen R&D and innovation support and sustainability
Recommendation 16: Establish public-private financing schemes (with equal funding by both sectors) for joint
business-academic R&D projects.
Recommendation 17: Establish a number of local innovation houses, in particular in regions outside the capital.
These should provide information and assistance to entrepreneurs on technical,
commercial and financial matters.
Recommendation 18: Encourage an increase in interdepartmental, inter-institutional and interdisciplinary
communications of all staff and experts at institutions concerned with innovation.
Recommendation 19: Launch a large-scale programme on environmental stewardship; develop R&D activities,
revise public procurement norms and standards, and introduce environmental and
sustainability concepts and thinking Into all training and education curricula.
C. Foster international and regional integration
Recommendation 20: Increase local provision of goods and services to foreign or joint-venture firms in Oman;
review and revise technology transfer and management frameworks, and support
structures for local businesses and universities.
Recommendation 21: Improve links with international research networks and, where necessary, formalize such
networks with adequate incentives, for example by sponsoring conferences, visits or workstudy cooperation.
Recommendation 22: Explore the full potential of the GCC as a free market and export area for export-led
diversification and innovation.
D. Develop evidence-based policies
Recommendation 23: Improve R&D statistics by considering and adopting the OECD model and
guidelines (the Frascati Manual).
Recommendation 24: Conduct regular innovation surveys using the OECD/EU model and guidelines (the Oslo
Manual).
Recommendation 25: Conduct international education tests such as PISA (administered by the OECD).
Recommendation 26: Establish and conduct regular programme evaluations using neutral, third party or
international teams to gauge performance in terms of results achieved vis-à-vis declared
objectives and funding used.
Recommendation 27: Improve the monitoring and forecasting of job creation, and establish linkages with
innovation, since certain technologies have a disruptive nature with considerable effects
on labour.
Strategic
innovation
pillars
A. Human resources
Recommendation 28: At colleges and universities, reduce places for liberal arts, humanities and non-vocational
studies.
Recommendation 29: Development policy should consider a mixed approach, supporting both technologically
advanced and innovative business, as well as developing labour-intensive sectors such as
the tourism industry.
Recommendation 30: Weigh the level and growth of public-sector employment against the needs of providing
quality public service, rather than for managing unemployment.
Recommendation 31: Restrain future increases in public sector wages in order to allow private sector
remuneration to catch up.
Recommendation 32: The National Innovation Strategy and Vision 2040 should explicitly recognize that the
presence of a large and mobile foreign population is a source of diversity that creates
opportunities for innovation-based development.
Recommendation 33: Improvement in overall educational attainment should be a central policy concern and
national expectations for standards to be achieved should be raised.
ANNEX: Summary table of recommended actions
75
B. Intellectual property
Recommendation 34: Formulate a national IPR strategy with due consideration to local specificities, as there is
no universal policy recommendation for all countries; the success of implementation of the
strategy should be measured by its socio-economic impact, beyond strict IP
measurements.
Recommendation 35: Develop a position on public domain and open access to ensure that publicly funded
research outcomes are made available to the general public. Policymakers should also
consider the necessity, and complementarities of proprietary and public domains for their
strategic role in spurring competitive and innovation-based economic growth.
Recommendation 36: Develop the human and technical capabilities to evaluate and grant patents.
Recommendation 37: Develop support for joint patent filings with other STI stakeholders, providing financial
support directly or through tax policy, and encourage the broader use national utility
patents.
Recommendation 38: Review and revise IP guidelines and regulations in academic institutions to maximize the
translation of R&D into innovation.
C. Diversification
Recommendation 39: Develop an export-oriented diversification strategy capable of partially replacing oil
revenues.
Recommendation 40: Decide on the level and nature of involvement of FDI in Oman’s diversification strategy.
Recommendation 41: Link the national diversification strategy to the National Innovation Strategy.
Recommendation 42: Establish an evidence-based policy management system, using monitoring and evaluation
to track the progress made in targeted sectors.
Recommendation 43: Consider the policy question of picking winners among sectors and industries and the
implications of such policies on broader diversification efforts and strategies.
Recommendation 44: Ensure that labour and human capacity development policies are designed from a shortmedium- and long-term perspective, as diversification is a continuous process; increase
the level of interaction between firms and educational institutions in order that they impart
the specializations and competencies needed by the firms, including instruction on
entrepreneurship.
An action plan
for a national
innovation
strategy and
system
Recommendation 45: Develop an action plan to implement the National Innovation Strategy and STIP
recommendations before the end of 2015.
Recommendation 46: Secure a strong expression of political commitment to reduce uncertainty and to mobilize
and incentivize stakeholders.
Recommendation 47: Ensure that the National Innovation Strategy Action Plan (NISAP) addresses not only
current needs but also long-term requirements as envisaged in Vision 2040; anticipate
newly emerging opportunities as well as risks and potential barriers, taking into account
issues such as sustainability and the finite nature of natural resource endowments.
Recommendation 48: Bear in mind that the NISAP will always be a work in progress as institutional relationships
evolve and learning processes strengthen.
Recommendation 49: As NISAP will require an effective planning group, the STIP National Group should be
considered as a starting point, given its comprehensive representation of Oman’s STI
stakeholders.
Recommendation 50: Conduct the NISAP as a change in mindset that will be guided by the capacity of the
national leadership to communicate, inspire, and show the way forward.
76
Science, Technology and Innovation Policy Review - Oman
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Notes
77
Notes
1
http://www.globalinnovationindex.org/content.aspx?page=gii-full-report-2013.
2
http://valtioneuvosto.fi/hallitus/tutkimusneuvosto/en.jsp.
3
Ministry of Education and Ministry of the Economy, Evaluation of the Finnish National Innovation System - Policy Report 2009,
Helsinki University Print; available at: https://www.tem.fi/files/25702/Policy_Report.pdf.
4
See: http://www.oecd.org/pisa/aboutpisa/.
5
NCSI, Monthly Statistical Bulletin, November 2013
6
National Centre for Statistics and Information (NCSI), National Accounts, Sultanate of Oman, 2012.
7
Ibid.
8
Ibid.
9
See also: Royal Decree 38/2011, On the abolition of the Ministry of National Economy, and Royal Decree 39/2011, On the granting of
the Council of Oman legislative and regulatory powers.
10
Estimates are based on proven reserves of 5.5 billion barrels and an annual production of 300 to 350 million barrels (Oxford Business
Group, Oman enhances oil production, 17 November 2013; available at:
http://www.oxfordbusinessgroup.com/economic_updates/oman-enhances-oil-production-0).
11
United States Energy Information Administration; available at: http://tinyurl.com/oman-co2-pc.
12
NCSI, National Accounts data, 2012
13
Oman’s innovation system has already been the subject of a study published in 2011 based on a benchmarking exercise comparing
Oman to neighbouring countries in the Gulf, and using indicators provided by the World Economic Forum (see SRI International,
2011). The present report draws occasionally upon data and analyses provided in this study. It will be referred to in this report by the
abbreviation, WEF/SRI.
14
It is interesting to note that Singapore, although one of the best GII performers, appears to be not very efficient in using its
exceptionally good assets to convert them into innovation outcomes (which, nonetheless, remain high).
15
In the followings we will refer to the 2013 GII data and the WEF data presented in the 2011 SRI report (relating to the year 2010)
16
General Federation of Oman Trade Unions, Annual Report 2012; available at:
http://gfotu.org/cpanel/my_documents/my_files/122%20%20%20%20%20GFOTU-Annual%20Report%202012.pdf.
17
To curb the entry of foreign workers, Oman raised the minimum wage for locals; see: http://www.reuters.com/article/2013/02/07/usoman-jobs-foreigners-idUSBRE9160S020130207).
18
Information Technology Authority – e.oman, http://tinyurl.com/omanisation
19
Data provided by the Ministry of Manpower, during the UNCTAD mission in May 2013.
20
Developed by the national oil company PDO, solar powered turbines produce over 13,000 tons of steam annually, thereby saving
almost one million cubic metres of natural gas and reducing CO2 emissions of over 1,800 tons.
21
The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the
discovery of a large natural gas field in 1959. According to Ebrahim-Zadeh (2003), "This syndrome … ‘Dutch disease’ … is generally
associated with a natural resource discovery, [but] it can occur from any development that results in a large inflow of foreign currency,
including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment. Economists have used the Dutch
disease model to examine such episodes, including the impact of the flow of American treasures into sixteenth-century Spain and
gold discoveries in Australia in the 1850s. … Let's take the example of a country that discovers oil. A jump in the country's oil exports
initially raises incomes, [but] as more foreign exchange flows in … real exchange rate appreciation weakens the competitiveness of
the country's exports and, hence, causes its traditional export sector to shrink.”
22
Source: Sheikh Salah al Maawali, Director General for the Directorate General of SME Development at MOCI, in Muscat Daily, 12
February 2013; available at: http://www.muscatdaily.com/Archive/Business/SMEs-contribute-14-to-country-s-GDP-says-official-21dd.
23
Central Bank of Oman, Annual Report 2012, pg. 27; available at: http://www.cbo-oman.org/annual/CboAnnualReportEn2012.pdf, and
information received directly from the Central Bank of Oman.
24
See, for instance, World Bank, Doing Business, an annual publication, which monitors the competition climate in countries throughout
the world.
25
R&D is not always successful, and investors cannot tell by observing researchers or managing their efforts if any particular research
path will generate an innovation in the form of a profitable commercial product or service. This problem is closely linked to the
problem of financing innovation. Financial institutions usually deal with calculated risks where risk premiums can be calculated and
built into the cost of investment. Unfortunately, the level of uncertainty of R&D and innovation outcomes is difficult to establish, and
the commercialization of a new technology will need to be financed by entrepreneurs or firms internally, or through venture capital or
angel investors who actively take on entrepreneurial opportunities and innovation risks.
26
Examples of large-scale infrastructure projects include the creation of the Sohar sea terminal, the expansion of Muscat port, and the
building of a train line to the United Arab Emirates.
78
Science, Technology and Innovation Policy Review - Oman
27
National Centre for Statistics and Information, Statistical Year Book 2012. This can be partly explained by the fact that large
mountains or desert areas intersect much of the country, making it difficult to expand broadband connections, particularly as some
areas are still inhabited by rural populations.
28
The leading company listed on the Muscat Stock Exchange in terms of capitalization (more than OMR 4 billion)
29
Although security concerns are part of the reason, this should have been resolved in Oman, just as it has in the United Arab Emirates
and Saudi Arabia, for example.
30
According to UNESCO statistics, in 2010 there were about 39 per cent of students in science, engineering and construction. However,
the rate of successful completion of studies seems to be modest. The percentage of science and engineering first degree students
(equivalent to an undergraduate degree) is very low (among the lowest of the GCC), according to the SRI report.
31
This figure was widely quoted during interviews conducted by UNCTAD in December 2013 and May 2014.
32
Of these researchers, approximately one fourth are associated with SQU and other universities (500 in FTE), one tenth with the
Agriculture and Fisheries public research system (200, including extension services staff), and the remainder work for the PDO and
other enterprises.
33
See: http://ycombinator.com.
34
See: http://www.businessinsider.com/startup-odds-of-success-2013-5.
35
See: http://online.wsj.com/news/articles/SB10000872396390443720204578004980476429190.
36
Oman is ranked 32 in the GII on this item according to the WEF Survey of Executives 2013.
37
Eight in total, two of them with physical facilities: the Oman Studies Centre and the Centre of Excellence in Marine Biotechnology.
38
These two issues (low salaries and bureaucratic burden) were acknowledged in the SQU Strategic Plan 2009-2013.
39
Some scientists met in the course of the UNCTAD visit summarized their experience as follows: “Dealing with SQU on joint research
is too expensive as administrative overheads take up much of the funding, while administrative policies are not clear. Research grants
at SQU could amount to OMR 150,000−OMR 250,000 for a period of 4 years, but access to SQU lab equipment and facilities is
difficult”.
40
During the UNCTAD mission in May 2013 similar comments were made by other establishments.
41
Data on wages available from the Social Security office are not indicative of the real situation, as only basic wages are tracked.
Pensions and insurances are, however, not considered a disincentive to mobility.
42
http://www.timesofoman.com/News/Article-18054.aspx.
43
For more details, see the ITA website. http://www.ita.gov.om/ITAPortal/ITA/
44
http://www.ameinfo.com/omani-smes-receive-technical-support-odb-328246.
45
Information provided at a PASMED seminar held on 3 July 2013 following the SME symposium.
46
http://www.timesofoman.com/News/Article-19229.aspx.
47
TIMSS 2007 International Mathematics Report: Findings from IEA’s Trends in International Mathematics and Science Study at the
Fourth and Eighth Grades. National Centre for Education Statistics, United States Department of Education; available at:
http://timss.bc.edu/TIMSS2007/PDF/TIMSS2007_InternationalMathematicsReport.pdf.
48
Highlights from TIMSS 2011, Mathematics and Science Achievement of U.S. Fourth- and Eighth-Grade Students in an International
Context. National Centrefor Education Statistics, United States Department of Education; available at:
http://nces.ed.gov/pubs2013/2013009rev.pdf.
49
Ministry of Education (Oman)Annual Educational Statistics Yearbook 2010/2011: 196.
50
Ministry of Manpower (Oman), Manpower from 1970 – 2010.
51
See full text of the OFTA, chapter 15 on IPR,
at:http://www.ustr.gov/sites/default/files/uploads/agreements/fta/oman/asset_upload_file715_8809.pdf.
52
Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates
53
Figures developed by Kagan Binder PLLC Intellectual Property Attorneys; see: http://www.kaganbinder.com/docs/7EstimatedPatentCosts.pdf and LSE (2006).
54
Diaz Reus Attorney and Solicitors, Intellectual property rights in the Sultanate of Oman; available at: http://www.diazreus.com/newsarticles-intellectual-property-sultanate-of-oman.html.
55
Most recently the National Portrait Gallery of the United Kingdom has changed its image licensing to allow free downloads for noncommercial and academic uses through a standard creative commons license (see: http://www.museumsassociation.org/museumsjournal/news/22082012-npg-changes-image-licensing-to-allow-free-downloads).
56
Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the
Convention on Biological Diversity and the International Treaty on Plant Genetic Resources for Food and Agriculture of the Food and
Agriculture Organization of the United Nations.
Notes
57
79
The diversification index indicates whether the structure of exports or imports, by product, of a given country or group of countries
differs from the structure of products of the world. This index, which ranges from 0 to 1, reveals the extent of the differences between
the structure of trade of the country or country group and the world average. An index value closer to 1 indicates a bigger difference
from the world average. The diversification index is computed by measuring absolute deviation of the country from the world structure,
as follows:
Where
hij = share of product i in total exports or imports of country or country group j, and
hi = share of product i in total world exports or imports.
This index is a modified Finger-Kreinin measure of similarity in trade. For more information, see Finger and Kreinin, 1979; see also:
http://unctadstat.unctad.org.
58
http://www.muscatdaily.com/Archive/Business/Oman-economy-to-expand-4.6-in-2013-says-Moody-s-2htl.
59
United States Energy Information Administration; available at: http://www.eia.gov/countries/cab.cfm?fips=MU.
60
Ibid.
61
See United States Environmental Protection Agency, at: http://www.epa.gov/pesticides/factsheets/copper-alloy-products.htm.
62
http://www.copper.org/applications/marine/cuni/pdf/marine_aquaculture.pdf.
63
See, for example: http://www.wipo.int/wipo_magazine/en/2010/06/article_0007.html, http://main.omanobserver.om/?p=61323 or
http://www.timesofoman.com/News/Article-20246.aspx .
64
See, for instance, the very numerous measures proposed by the stakeholders consulted in the SRI report.
65
The Innovation Grand Committee is chaired by His Highness Sayyid Shihab bin Tariq Al Said, His Majesty the Sultan's Adviser, TRC
Chairman and Secretary General, as well as the Ministers of Commerce, Agriculture, Education and Manpower..
66
The fact that the Finnish economy may appear very dependent on the IT sector today, and most notably on one single company,
Nokia, which is in serious difficulty, should not hide the successful performances of a number of other sectors and technologies, which
contribute to further demonstrating its inner resilience.
67
The first initial work in this area was a report commissioned in the United States by President Johnson in 1967. Entitled Technological
Innovation and its Environment, and known as the Charpie Report, after Bob Charpie the chairman of the panel on technological
innovation of the U.S. Department of Commerce (then CEO of Union Carbide), it was a pioneering work that identified clearly the
specificity of innovation policy, as distinct from research policy, and highlighted a number of obstacles to the creation of an innovation
climate in the United States, notably the development of small, innovative firms which it considered to be major vectors of innovation.
However, since it was conceived simply as a report, without mechanisms to follow up and enforce the measures it proposed, the
exercise had only a small impact.
68
Oman’s per capita C02 emissions from energy consumption are about 17 metric tons per annum, which places it in the top 20 countries
for emissions per capita worldwide. However, it has a lower footprint than Qatar, the United Arab Emirates, Kuwait, Bahrain and Saudi
Arabia, according to 2011 data from the United States Energy Information Administration; see: http://tinyurl.com/oman-co2-pc.
69
The Trends in International Mathematics and Science Study (TIMSS) is an international assessment of the mathematics and science
knowledge of 4th and 8th grade students developed by the International Association for the Evaluation of Educational Achievement
(IEA). It allows participating nations to compare students' educational achievements across borders (see: http://www.timss.org/).
Printed at United Nations, Geneva – 1415449 (E) – October 2014 – 513 – UNCTAD/DTL/STICT/2014/1